WHIGAM 


AND 


FREDERICK 


D.C.HEATH  &.  CO 
BOSTON 


BOOK 


AND 


PRACTICE 


wo»«M»iiinmji»muiiJ»»iini«iii»Bmiiiwiw 


o^ 


IN   MEMORIAM 
FLORIAN  CAJORI 


BOOKKEEPING 


AND 


BUSINESS    PRACTICE 


BY 

WALLACE   H.  WHIGAM,  M.S.,  LL.M. 

RICHARD   T.   CRANE  TECHNICAL   HIGH   SCHOOL,   CHICAGO,   ILL. 
AND 

OLIVER    D.    FREDERICK,  M.S. 

MURRAY    F.   TULEY    HIGH    SCHOOL,    CHICAGO,    ILL. 


oJ<Xc 


BOSTON,    U.S.A. 

D.  C.  HEATH   &   CO.,   PUBLISHERS 

1910 


Copyright,  1910, 
By  D.  C.   Heath  &  Co. 


r' 


PREFACE 

In  the  preparation  of  this  text,  two  aims  have  been  constantly  kept  in  view,  viz.  : 
To  present  the  subject  so  that  the  pupil  may  derive  the  greatest  possible  cultural  bene- 
fit, and  to  make  the  work  practical ;  that  is,  to  make  it  conform  as  nearly  as  possible 
to  the  methods  and  practices  of  the  business  world. 

The  inductive  method  of  development  is  followed  in  this  text  whenever  the  nature 
of  the  subject  makes  it  practicable.  As  far  as  possible,  long  discussions  of  theoretical 
points  have  been  avoided.  Subjects  have  not  been  introduced  more  rapidly  than  the 
average  pupil  is  capable  of  comprehending  the  theory  and  processes  involved.  Through- 
out the  text  it  has  been  the  aim  to  lead  the  pupil  to  make  use  of  his  previous  knowledge. 

In  the  beginning,  the  account  rather  than  the  journal  has  been  introduced.  First, 
because  the  inductive  method  of  development  lends  itself  more  readily  to  this  order 
of  presentation.  Second,  because  by  this  order  the  pupil  concentrates  his  powers  upon 
one  kind  of  value  received  and  disposed  of,  and  also  because  the  pupil  immediately 
realizes  that  his  work  is  productive  of  results.  If  the  journal  is  introduced  at  the 
beginning,  the  pupil  works  unintelligently  because  he  does  not  comprehend  the  purpose 
of  what  he  is  required  to  do.  Third,  because  this  is  the  historical  order  of  the  develop- 
ment of  bookkeeping.  At  first  the  ledger  was  the  original  book  of  entry,  and  still 
is  in  many  instances,  while  the  journal  never  has  been  regarded  as  a  book  of  original 
entry.     Fourth,  because  this  order  of  presentation  is  advocated  by  the  best  accountants. 

This  text  is  divided  into  lessons,  and  what  is  required  of  the  student  is  definitely 
stated.  In  the  average  text-book  on  bookkeeping,  such  directions  are  nearly  always 
lacking,  making  it  extremely  difficult  to  determine  what  is  wanted. 

Theoretical  bookkeeping  and  business  practice  are  included  in  one  text.  The 
aim  has  been  to  give  sufficient  exercise  in  the  making  of  bookkeeping  records  thoroughly 
to  familiarize  the  pupil  with  the  forms  and  the  language  of  the  subject  before  he  is 
called  upon  to  write  and  receive  the  business  papers  that  are  necessary  in  the  second 
part  of  the  text.  It  is  the  common  experience  of  teachers  that  pupils  beginning  the 
subject  with  the  business  practice  always  regard  bookkeeping  proper  as  of  secondary 
importance. 

In  the  introductory  exercises  and  in  the  earlier  sets  no  price  lists  are  given,  the 
pupil's  efforts  in  this  part  of  the  work  being  directed  mainly  to  the  mastering  of  forms 
and  principles.  In  Set  IV  thirty  price  lists  are  supphed.  In  the  beginning  of  the 
business  practice,  only  one  set  of  prices  is  given,  but  the  latter  part  is  so  arranged  that 
each  pupil  of  a  class  may  use  different  selling  prices  for  certain  commodities. 

It  has  been  our  aim  to  make  the  transactions  conform  to  those  occurring  in  actual 
practice,  and  we  have,  therefore,  avoided  three-party  personal  drafts  and  other  nearly 
obsolete  forms. 


M30597S 


IV 


PREFACE 


The  authors  have  used  the  development  followed  in  this  text  in  their  classes  with 
gratifving  results.  The  transactions  have  also  been  tested  in  the  class  room,  to  be 
assured  that  the  proper  material  has  been  provided. 

In  the  development  of  single  entry,  matter  is  used  that  has  already  been  used  in 
double  entry.  In  this  way  the  student  has  an  opportunity  of  comparing  the  two 
methods.  It  is  believed  that  by  so  doing  he  will  best  appreciate  the  advantages  and 
disadvantages  of  the  two  systems.  Should  the  teacher  desire  to  do  so,  there  is  no 
reason  why  the  subject  of  single  entry  may  not  be  used  at  an  earlier  period  in  the  course 
than  its  position  in  the  text  indicates. 

The  authors  desire  to  express  their  appreciation  to  the  following  teachers  for  criti- 
cisms and  suggestions  offered  during  the  progress  of  the  development  of  this  text : 
Mr.  E.  E.  Gaylord,  High  School,  Beverly,  Mass.;  Mr.  J.  C.  Edwards,  Wendell  Phillips 
High  School ;    Mr.  William  A.  Hadley,  Lake  View  High  School,  and   Mr.  James   C. 

Reed,  McKinley  High  School,  Chicago,  Illinois. 

W.   H.  W. 
O.   D.   F. 


TABLE    OF   CONTENTS 


PART    I 

LESSON  PAGE 

I.    Cash  Account 1 

II.    Merchandise  Account  without  Inventory 5 

III.  Merchandise  Account  with  Inventory 8 

IV.  Notes 11 

V.     Bills  Receivable  Account li 

VI.     Bills  Payable  Account 16 

VII.     Combination  of  Accounts 19 

VIII.     Personal  Accounts 21 

IX.     Sundry  Accounts 23 

X.     Entering  Transactions  in  the  Journal  —  Set  I 28 

XI.    Transactions  —  Set  II 32 

XII.    Part  I  —  Interest  Account.     Part  II  —  Discount  Account 35 

XIII.  Classification  of  Books  of  Record 37 

XIV.  Transactions  — Set  III 39 

XV.     Transferring  Entries  from  Journal  to  Ledger — Set  I 43 

XVI.     Posting  the  Transactions  of  Lesson  XI  —  Set  II 46 

XVII.     Posting  the  Transactions  of  Lesson  XIV — Set  III 47 

XVIII.     Analysis  of  Accounts  and  closing  the  Ledger 48 

XIX.     Closing  Ledger  —  Set  I 50 

XX.     Closing  Ledger  —  Set  II 51 

XXL     Closing  Ledger  — Set  III 52 

XXII.     Balance  Sheet 53 

XXIII.  Balance  Sheets  of  Sets  I,  II,  and  III 57 

XXIV.  Part  I  —  Account  with  Cash  Discount.     Part  II  —  Trade  Discount  ...  58 
XXV.  The  Use  of  the  Cash  Book,  the  Bill  Books,  and  the  Sales  Book    ...  60 

XXVI.    Furniture  Business  —  Set  IV 65 

XXVII.     Posting  — Set  IV  (August)          .        .        .• 76 

XXVIII.     Closing  Ledger  and  making  Balance  Sheet 79 

XXIX.     Transactions  —  Set  IV  (September) 80 

XXX.     Shipments  and  Consignments 87 

XXXI.     Drafts 89 

XXXII.     Business  Letter  Writing 92 

XXXIII.  Exercises  in  opening  and  closing  Books 95 

XXXIV.  Single  Entry 100 

PART   II 

BUSINESS   PRACTICE 107 

V 


TO    THE    PUPIL 

In  addition  to  books  and  papers  included  in  this  bookkeeping  outfit,  you  should 
supply  yourself  with  paper,  pens,  penholders,  ruler,  ink,  etc.,  as  your  teacher  may  direct. 
The  best  materials  obtainable  are  none  too  good. 

Neatness  and  accuracy  count  for  so  much  in  bookkeeping  that  you  cannot  afford 
to  do  any  part  of  the  work  carelessly.     Make  up  your  mind  to  do  your  best  all  the  time. 

Never  begin  to  make  entries  until  you  understand  exactly  what  is  to  be  done.  In 
working  out  exercises  on  loose  paper  be  as  painstaking  as  if  you  were  making  entries 
in  permanent  books.  Your  penmanship  needs  constant  attention.  Follow  carefully 
the  instructions  of  your  teacher  regarding  the  holding  of  the  pen,  position,  etc. 


ABBREVIATIONS 


Ave. 


A  I      . 
Acct.  or  acct. 
Acct.  Cur. 
Acct.  Sales 
Adv.  or  adv. 
Agt. 
A.M. 


Amt. 

Ans. 

App. 

Asst. 

Atty. 

Av.  or 

Bal. 

B.B. 

bbl. 

bdl. 

Bk. 

bkt. 

B/L. 

Bldg. 

B.C. 

Bot. 

B/S. 

bu. 

bx. 

c. 

Cash. 

C.B. 

C.H. 

Chgs. 

Ck. 

Co. 

C.O.D. 

Coll. 

Com. 

Cr. 

cwt. 

da. 

Dept. 

Dft. 

Disc. 

do. 

doz. 


First-class. 

Dr.      . 

Account. 

Dray.  . 

Account  Current. 

E.E.     . 

Account  of  Sales. 

E.  and  O.E 

Advertisement. 

Agent. 

ea. 

Before  noon;    Master 

e.g.      . 

of  Arts. 

Esq.    . 

Amount. 

etc.  or  &c. 

Answer. 

Ex.       . 

Appendix. 

Exch.  . 

Assistant. 

Fig.     . 

Attorney. 

F.O.B.  or  f. 

Avenue. 

Fol.     . 

Balance. 

Frt.      . 

Bill  Book. 

ft.,  also  ' 

Barrel. 

gal.      . 

Bundle. 

gr- 

Bank. 

gro.      . 

Basket. 

hhd.     . 

Bill  of  Lading. 

hund.  . 

Building. 

LB.      . 

Back  order. 

i.e. 

Bought. 

in.,  also  " 

Bill  of  Sale. 

Ins.      . 

Bushel. 

inst.     . 

Box. 

Cent. 

Int.      . 

Cashier. 

Inv.     . 

Cash  Book. 

I.O.U. 

Custom  House. 

J-          . 

Charges. 

Jr.        . 

Check. 

kg.       . 

Company;   County. 

lb.        . 

Collect  on  Delivery. 

L.B.    . 

Collection. 

L/C    . 

Commission. 

Led.    . 

Credit  ;    Creditor. 

L.F.     . 

Hundredweight. 

Ltd.    . 

Day. 

M.       . 

Department. 

Mdse. 

Draft. 

Mem.  or  Mt 

Discount. 

Messrs. 

The  same. 

Mfg.    . 

Dozen. 

min.    . 

Debit;    Debtor. 
Drayage, 
Errors  excepted. 
Errors  and  omissions 

excepted. 
Each. 

For  example. 
Esquire. 
And  so  forth. 
Express  ;    Example. 
Exchange. 
Figure,  Figures. 
Free  on  board. 
FoHo. 
Freight. 
Foot,  Feet. 
Gallon. 
Grain. 
Gross. 
Hogshead. 
Hundred. 
Invoice  Book. 
That  is. 
Inch,  Inches. 
Insurance. 
Instant  (the  present) 

month. 
Interest. 

Invoice  ;   Inventory. 
I  owe  you. 
Journal. 
Junior. 
Keg. 
Pound. 
Letter  Book. 
Letter  of  Credit. 
Ledger. 
Ledger  Folio. 
Limited. 
Thousand. 
Merchandise. 
Memorandum. 
Gentlemen  ;   .Sirs. 
Manufacturing. 
Minute. 


Vlll 


ABBREVIATIONS   AND   ARBITRARY   SIGNS 


mo. 

.     Month. 

pt.        . 

Pint. 

M.O.D. 

,     Mail    Order   Depart- 
ment. 

P.S.     . 

qr.         . 

Postscript. 
Quire ;   Quarter. 

Mr.      . 

.     Mister. 

qt.          . 

.     «")uart. 

Mrs.     . 

.     Mistress. 

Reed.  . 

Received. 

MS.     . 

.     Manuscript. 

Reg.    . 

Registered. 

MSS.  . 

Manuscripts. 

Retd.  . 

Returned. 

Mtg.    .         .         . 

Mortgage. 

R.F.D.  or  E 

.D. 

Rural  Free  Delivery. 

N.A.    . 

North  America. 

R.R.    . 

Railroad. 

N.B.    . 

Take  Notice. 

Ry.      . 

Railway. 

No.      . 

Number. 

S.B.     . 

Sales  Book. 

N.P.    , 

Notary  Public. 

Sec.     . 

Secretary. 

O.K.    . 

All  correct. 

Shipt.  . 

Shipment. 

Oz.  or  oz.     . 

Ounce. 

St|.  ft.   . 

Square  Feet. 

p.         .         .         . 

Page. 

Sr. 

Senior. 

Payt.  or  payt. 

Payment. 

St.       . 

Street. 

pc.       . 

Piece. 

Str.      . 

Steamer. 

Pd.      . 

Paid. 

Sund. . 

Sundries. 

per 

By. 

Supt.  . 

.     Superintendent. 

Per  cent  or  per  cent   . 

By  the  hundred. 

Tr.       . 

Transpose. 

Pk 

Peck, 

Treas. 

Treasurer. 

pkg 

Package. 

ult.       . 

Ultimo;    of  the  last 

P.M.    . 

Postmaster  ;       After- 
noon. 

U.S.M. 

month. 
United  States  Mail. 

P.O 

Post  Office. 

vol.      . 

Volume. 

PP 

Pages. 

viz. 

Namely  ;    to  wit. 

pr 

Pair. 

vs. 

Against. 

Pres.    . 

President. 

W/B  . 

Way  Bill. 

prox.    . 

Proximo  ;  of  the  next 
month. 

wk.      . 
\vt. 

Week. 
Weight. 

ARBITRARY   SIGNS 


a/c      . 

.     Account. 

@        .        .        . 

.     At  or  to. 

c/o 

.     Care  of. 

^      .     .     . 

.     Cent. 

V         .       .       . 

.     <  :heck  mark. 

$     .     .     . 

.     Dollar. 

# Number. 

% Per  cent. 

" Ditto. 

i^  .         .         .         .         .         ,  One  and  one-fourth. 

i2  .....         .  One  and  two-fourths. 

I^  .         .         .         ,         .         .  One  and  three-fourths. 


BOOKKEEPING 


PART    I 


LESSON    I 


CASH   ACCOUNT 

Introduction.  —  If  a  boy  were  given  a  five-dollar  bill  with  instructions  to  make  a  pur- 
chase, he  would  probably  not  find  much  difficulty  in  doing  what  was  required.  He 
would  return  with  the  purchase  and  the  correct  change  without  necessarily  making  a 
written  record  of  what  he  had  done. 

If,  however,  he  received  money  at  different  times  with  which  to  make  a  number  of 
purchases,  or  were  to  make  several  collections  and  payments,  he  would  find  it  necessary 
to  make  some  kind  of  written  record.  Such  record,  if  made  in  some  systematic  manner, 
would  be  bookkeeping. 

Read  the  transactions  stated  in  Example  1,  and  observe  how  they  are  recorded  in 
the  model  form. 

Example  1.  —  A  boy  makes  the  following  collections  and  payments  of  cash:  Jan.  2, 
19 — ,  collects  from  James  Smith  $75;  Jan.  2  collects  $50.40  for  wheat  sold;  Jan.  3 
pays  for  groceries  $24.36;  Jan.  4  pays  tax  bill  $43.60;  Jan.  7  collects  from  S.  B.  Jones 
$46.80,  also  from  P.  F.  Doe  $25.60;  Jan.  7  pays  for  sidewalk  repairs  $26.30;  Jan.  9 
collects  from  L.  Smith  $21.  He  hands  in  the  following  statement  of  money  received 
and  paid  out  and  the  amount  he  has  on  hand  on  Jan.  10: 


(3aAAy 


1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

J^ayyz< 

7^ 
so 

^0 

J* 

^3 

36 

60 

7 

^6 
J}S 

to 

60 

7 

Tia.Ja.'^T^c.ey 

^'^ 

J^6 

30 

2.  6 

9 

CS-tzAz^'T^z^c^y 

^/ 

ji/r 

f  V 

to 

^/r 

w 

^^i^^n< 

// 

A^ 

/=2  4/ 

JV 

The  above  is  one  bookkeeping  form  of  keeping  a  record  of  money  received  and 
paid  out.  It  is  a  ledger  form  and  is  called  a  cash  account ;  other  forms  will  be  given 
in  later  lessons. 


2  BOOKKEEPING 

The  vertical  rulings  divide  the  page  into  a  number  of  columns  or  spaces.  For  the 
purpose  of  explaining  their  use  they  are  numbered  in  the  model  form.  You  will  omit 
the  numbers  in  your  work. 

Spaces  1,  2,  7,  and  8  are  date  columns ;  i.e.  day  and  month. 

Spaces  3  and  9  are  for  explanations. 

Spaces  4  and  10  are  folio  columns  (that  is,  page  columns :  columns  in  which  to 
record  pages  of  other  books),  and  not  used  at   present. 

Spaces  5,  6,  11,  and  12  are  money  columns. 

QUESTIONS 

1.  On  which  side  are  the  receipts  entered  .<•     The  payments.? 

2.  What  are  the  total  receipts  }     Total  payments  } 

3.  What  is  the  difference  between  the  two .'' 

4.  In  the  model  what  name  is  given  to  the  difference .'' 

5.  How  do  the  sides  compare  in  amount  after  entering  the  balance.? 

6.  How  would  you  define  a  balance .'' 

7.  Is  the  balance  a  record  of  a  payment  or  a  receipt  ? 

8.  Can  you  see  any  reason  why  the  entry  is  made  in  red  ink } 

9.  Where  and  how  is  the  balance  entered  a  second  time .-' 

10.  Across  which  spaces  do  the  single  rulings  extend  }     The  double  } 

11.  If  there  is  a  difference,  which  side  is  the  greater .-'     Why .-' 

Closing  an  Account.  —  Closing  an  account  is  the  process  of  finding  the  amount  neces- 
sary to  make  the  two  sides  equal,  and  entering  it  in  red,  afterward  footing  both  sides  in 
black  and  ruling  a  single  line  across  the  money  column,  immediately  beneath  the  last 
entry  on  the  longer  side;  another  single  line  across  the  other  money  column  directly 
opposite  the  first ;  and  then  double  lines  across  everything  but  the  wide  explanation 
columns. 

Closing  entries  when  carried  below  the  double  rulings  are  generally  entered  as  of  the 
day  following  the  date  of  closing. 

The  Use  of  the  Ruler.  —  All  rulings  are  made  in  red  ink  with  the  use  of  a  ruler.  The 
beveled  side  of  the  ruler  is  placed  on  the  paper.  The  pen  is  held  against  the  edge  of 
the  ruler.  If  but  a  single  line  is  used,  it  should  be  ruled  on  the  light  blue  line ;  if  two 
lines,  the  upper  one  should  be  on  the  light  blue  line,  and  the  other  just  beneath.  Do  not 
move  the  ruler  until  both  lines  have  been  drawn;  they  will  then  be  parallel.  Diagonal 
lines  are  sometimes  used. 

The  lines  are  designated  as  follows  in  bookkeeping  :  single  line,  addition  line  ;  double 
line,  closing  or  balancing  lines ;  and  diagonal  line,  guard  line.     See  form,  page  5. 

Required  of  the  Student.  —  Copy  on  loose  ledger  paper  the  form  given  on  page  1. 
Observe  every  step  of  the  work  with  care.  After  all  the  items  received  and  paid  out 
are  entered,  the  total  receipts  and  payments  are  entered  in  small  pencil  figures.  Do 
not  try  to  work  rapidly  at  first.  Your  teacher  will  instruct  you  how  to  make  the  rulings 
most  successfully. 


CASH   ACCOUNT  3 

Record  the  receipts  and  payments  of  cash  in  Examples  2,  3,  and  4,  following  the 
model  given  for  Example  1. 

Example  1. — Jan.  2,  10 — ,  balance  of  cash  on  hand  $75.61  (enter  on  left  side); 
Jan.  2  received  cash  $42;  Jan.  3  received  cash  $81.24;  Jan.  4  paid  cash  $25.62;  Jan.  5 
paid  cash  $43.60;  Jan.  6  received  cash  $14.20;  Jan.  6  paid  cash  $21.75;  Jan.  7  paid 
cash  $14.70;  Jan.  9  received  cash  $18.75;  Jan.  10  received  cash  $24.50;  Jan.  11  paid 
cash  $24.30;  Jan.  13  paid  cash  $21.45.     Enter  the  balance  and  rule,  using  the  last  date. 

Example  3.  — John  Smith  was  attending  school  outside  of  his  home  town  and  received 
cash  and  made  necessary  payments  as  follows:  Jan.  2,  10 — ,  left  home  with  cash  $75; 
Jan.  2  paid  railroad  fare  $14.60;  Jan.  3  paid  for  board  and  room  rent  one  week  in 
advance  $6  ;  Jan.  3  paid  tuition  for  one  term  $40;  Jan.  3  paid  for  delivering  trunk,  etc., 
$.75  ;  Jan.  5  paid  for  books  $6.40;  Jan.  6  received  for  work  done  during  week  $2.50; 
Jan.  8  gave  contribution  at  church  $.25;  Jan.  10  paid  for  gymnasium  suit  $5;  Jan.  11 
received  from  home  $25;  Jan.  11  paid  board  and  room  rent  $6;  Jan.  13  paid  laundry 
bill -i!. 75;  Jan.  13  received  for  work  done  $3.50.  Enter  the  balance  and  rule  up  the 
account,  using  last  date. 

Example  4.  —  Robert  White  made  collections  and  payments  for  the  Excelsior  Laun- 
dry Company  as  follows:  Jan.  3,  19 — ,  collections  from  A.  B.  Jones  $5.43;  from  Mrs. 
A.  L.  Brown  $4.27;  from  J.  P.  Shaw  $3.64;  from  J.  A.  Lyons  $10.04;  from  J.  F. 
Sarley  $3.60 ;  from  E.  L.  Coe  $2.37  ;  from  Mrs.  L.  Greenwood  $2.61 ;  from  Mrs.  A.  E. 
Baker  $1.94;  from  R.  A.  Reed  $.97;  from  B.  Conway  $1.94;  from  J.  F.  Norek  $2.61; 
from  W.  L.  Mayer  $4.73;  from  D.  E.  Borg  $2.04;  from  D.  G.  Mayer  $6.21;  from 
Wm.  Newman  $1.84.  Payments  to  F.  Monk  $1.25;  to  Marshall  Field  &  Co.  $14.60; 
to  W.  L.  Mayer  $2.03.     Balance  the  account  and  rule,  using  last  date. 

After  your  work  for  these  examples  has  been  approved,  copy  it  into  the  exercise 
book.      Do  not  crowd  your  work  —  allow  at  least  two  blank  spaces  after  each  account. 

Forwarding  Accounts  to  New  Pages.  —  It  frequently  becomes  necessary  to  forward 
an  account  to  another  page.  The  account  ruled  up  and  forwarded  must  show  the  page 
of  the  new  account  and  the  latter  account  must  show  the  page  of  the  former  account. 
The  following  "  Cash  "  account  is  recorded  as  of  page  10,  and  is  forwarded  to  page  21. 
The  cross  references  are  shown  in  the  accounts.  The  column  in  which  the  page  numbers 
are  entered  is  called  the  folio  column. 


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4  BOOKKEEPING 

Bookkeeping  authorities  do  not  altogether  agree  as  to  the  use  of  red  ink.  All  prefer 
it  in  closing  an  account,  as  shown  on  page  1 ;  but  when  it  comes  to  forwarding  a  foot- 
ing to  a  new  page,  some  advocate  the  use  of  red  ink  and  others  black  ink.  In  this  text 
red  is  used. 

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DEFINITIONS 

Bookkeeping  is  the  process  of  making  records  of  business  transactions  for  future 
reference. 

A  business  transaction  is  an  exchange  of  values. 

An  account  is  an  item,  or  several  items,  properly  arranged  under  a  distinct  head; 
e.g.  a  cash  account. 

A  cash  account  is  a  record  of  cash  receipts  and  payments.  Cash  includes  money, 
checks,  postal  orders,  etc. 

To  open  an  account  is  to  write  a  special  heading,  such  as  "Cash,"  under  which  will 
be  entered  receipts  on  one  side  and  payments  on  the  other  side.  The  account  is 
opened  when  the  heading  is  written.  The  model  should  always  be  followed  as  to  the 
place  for  the  heading. 

A  balance  is  the  difference  between  the  two  sides  of  an  account.  It  is  entered  in 
red  ink,  showing  that  it  is  an  item  not  occasioned  by  a  transaction. 

Closing  an  account  is  the  process  of  making  an  entry  that  will  render  the  two  sides 
equal. 


LESSON    II 


MERCHANDISE    ACCOUNT   WITHOUT   INVENTORY 

Introduction.  —  The  purpose  for  which  business  is  carried  on  is  gain,  or  profit.  The 
cash  account  explained  in  the  previous  lesson  does  not  show  that  anything  has  been 
gained  or  lost.  The  reason  for  this  is  evident :  money  is  received  and  paid  out  at  the 
same  value  unit  for  unit.  Not  so  with  the  commodities  in  which  a  merchant  deals.  A 
ton  of  coal  may  be  bought  for  $5.50  and  sold  at  $7.60.     The  difference  is  gain. 

The  commodities  bought  and  sold  by  a  business  for  the  purpose  of  gain  are  usually 
designated  by  the  general  term  "merchandise,"  and  the  account  in  which  a  record  is  kept 
of  them  is  called  the  merchandise  account. 

Example  1.  —  The  record  of  the  following  transactions  illustrates  how  this  account 
is  kept:  Feb.  1,  19—,  bought  sugar  $125;  Feb.  2  bought  coffee  $143.60;  Feb.  3  sold 
coffee  and  sugar  $67.80;  Feb.  3  sold  coffee  $89.17;  Feb.  4  sold  sugar  $64.25;  Feb.  6 
bought  flour  $142.60;  Feb.  7  sold  flour  $94.36;  Feb.  8  sold  flour  and  sugar  $124.60; 
Feb.  10  sold  flour  and  coffee  $43.60;  Feb.  11  sold  all  remaining  goods  $83.20.  Find 
the  gain  or  loss,  and  close  the  account  as  of  Feb.  12. 


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1.  On  which  side  of  the  account  is  merchandise  entered  when  bought .-' 

2.  Merchandise  sold  is  entered  where  .'* 

3.  What  is  the  total  cost .-'     The  total  sales  } 

4.  What  is  the  difference  between  the  total  cost  and  the  total  sales  called  ? 

5.  On  which  side  of  the  account  is  the  gain  entered .'' 

6.  How  would  you  explain  the  use  of  red  ink  in  this  entry  .? 

7.  What  would  the  account  show  if  the  red  ink  difference  had  been  required  on 
the  other  side  of  the  account .-'     Explain  fully. 

8.  How  much  was  gained  ?     On  a  cost  of  how  much  .■*     Find  the  per  cent  of  gain. 

5 


6  BOOKKEEPING 

9.    Why  was  there  no  "Balance"  to  bring  down  in  this  account  ? 
10.    You  have  $  100  cash  with  which  you  buy  a  bicycle,  later  seUing  it  for  $125  cash. 
Open  a  bicycle  account  on  loose  paper. 

(a)    What  is  the  cost  as  shown  by  the  bicycle  account .'' 

(d)    What  is  the  amount  produced  as  shown  by  the  bicycle  account  ? 

(c)     How  much  did  you  gain  ? 

{d)    How  much  cash  have  you  on  hand.''     How  much  did  you  have  on  hand? 

((?)    Is  the  gain  in  the  bicycle  account  or  in  the  cash  account.-' 

(/)   Which  account  produced  the  gain.? 

You  will  notice  the  difference  between  this  account  and  those  of  the  previous  lesson. 
In  one  case  the  difference  represents  something  of  a  fixed  value  that  the  business  has 
on  hand ;  in  the  other,  what  is  gained  or  lost.  Whether  the  result  is  a  loss  or  a  gain, 
the  term  "  Loss  and  Gain  "  is  used. 

You  will  notice  the  abbreviations  for  debit  and  credit,  Dr.  and  Cr.,  respectively,  in 
connection  with  the  preceding  account.  Debit  means  to  charge ;  it  also  means  the  cost 
or  charge  side  of  an  account.  Credit  means  the  opposite  of  debit.  Custom  has  es- 
tabUshed  that  the  left-hand  side  of  an  account  shall  be  the  debit  and  the  right-hand  side 
the  credit.  Hereafter  the  terms  Dr.  and  Cr.  will  be  used  to  designate  the  sides  of 
accounts. 

In  the  above  account  "  Loss  and  Gain  "  is  written  in  the  explanatory  space  as  a  part 
of  the  closing  entry.  The  result  here  is  a  gain.  The  same  expression  is  used  in  this 
text  when  an  account  shows  a  loss.  It  is  advocated  by  some  that  only  one  word,  either 
gain  or  loss,  be  used  as  an  explanation.  "  Profit  and  Loss,"  or  either  of  these  words,  may 
be  used  with  equal  propriety.  But  bookkeepers  and  accountants  generally  prefer  to  use 
both  words.  The  important  thing  is  to  understand  what  the  closing  entry  means,  and 
to  be  uniform  in  the  form  of  explanation. 

Required  of  the  Student. — Copy  the  model  on  loose  paper;  then  make  similar 
records  of  Examples  2  and  3,  and,  after  having  your  work  approved,  copy  it  in  the 
exercise  book. 

Example  2.  —  YQh.  1,  19—  bought  mdse.  $123.40;  Feb.  2  bought  mdse.  $162.19; 
Feb.  2  sold  mdse.  $46.30;  Feb.  3  bought  mdse.  $99.26;  Feb.  4  bought  mdse. 
$135.44;  Feb.  5  sold  mdse.  $47.50;  Feb.  6  sold  mdse.  $16.35;  Feb.  8  sold  mdse. 
$22.19;  Feb.  9  sold  mdse.  $74.25;  Feb.  10  sold  mdse.  $104.13;  Feb.  11  sold 
mdse.  $44.21;  Feb.  12  sold  all  mdse.  for  $246.75.  Find  the  gain  or  loss,  and  close 
the  account  as  of  Feb.  15. 

Example  3. —  Feb.  1,  19 — ,  mdse.  on  hand,  $1065.25  (enter  on  Dr.  side);  Feb.  1 
bought  mdse.  $87.96;  Feb.  2  bought  mdse.  $165.30;  Feb.  2  sold  mdse.  to  J.  P.  Doe 
$16.75,  to  R.  K.  Lee  $15.18,  to  S.  S.  Snow  $9.65;  Feb.  3  bought  mdse.  from  R.  M. 
Towne  &  Co.  $196.48;  Feb.  4  sold  mdse.  as  follows:  to  M.  L.  Sawyer  $28.16,  to 
E.  N.  Piper  $3.75,  to  M.  W.  Fry  $89.60;  Feb.  5  sold  mdse.  $186.14;  Feb.  6  sold 
mdse.  $48.29;   Feb.  8  sold  mdse.  to  John  Kulp  $46.82,  to  J.  J.  Clare  $14.86,  to  A.  D. 


MERCHANDISE   ACCOUNT   WITHOUT   INVENTORY  7 

Ziegler   ;^  341.82;    Feb.  9  sold  all  mdse.   remaining  on  hand  for  $500.     Find  gain  or 
loss,  and  close  the  account  as  of  Feb.  10. 

QUESTIONS   ON   EXAMPLE   3 

1.  Explain  why  merchandise  on  hand  at  the  beginning  was  entered  on  the  debit  side. 

2.  Which  is  the  greater,  the  debit  side  or  the  credit  side  ? 

3.  On  which  side  was  the  difference  entered  to  make  the  sides  equal .-" 

4.  Does  the  account  show  a  loss  or  a  gain  ? 


LESSON    III 


MERCHANDISE    ACCOUNT    WITH    INVENTORY 

To  find  the  gain  or  loss  when  the  goods  have  not  all  been  sold. 

Example  1.  —  Feb.  1,  19—,  bought  mdse.  $  657.50  ;  Feb.  2  bought  mdse.  $  284.30  ; 
Feb.  3  bought  mdse.  $327.34;  Feb.  4  sold  mdse.  to  M.  S.  Lowe  $09.18;  Feb.  5  sold 
mdse.  to  S.  W.  Ruth  $  72.50 ;  Feb.  G  sold  mdse.  to  W.  L.  Jones  $  10.15;  Feb.  8  bought 
mdse.  $28.90;  Feb.  8  sold  mdse.  to  W.  W.  Peters  $128.60;  Feb.  9  sold  mdse.  to  Mrs. 
Samuel  Buckman  $  42.20  ;  Feb.  10  sold  mdse.  to  K.  G.  Lowell  $  143.50  ;  Feb.  11  mdse. 
remaining  unsold  is  worth  $  935.03.     Find  the  gain  or  loss  on  merchandise  as  of  Feb.  15. 

In  computing  the  value  of  merchandise  on  hand  at  any  time  it  is  customary  to  use 
the  cost  price. 


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QUESTIONS 

1.  What  is  the  total  cost  of  goods  bought .-' 

2.  How  much  was  received  for  the  goods  sold.? 

3.  Were  all  the  goods  sold  1 

4.  Where  is  the  value  of  the  goods  on  hand  entered.? 

5.  Why  is  this  amount  entered  on  the  credit  side .'' 

6.  Work  the  following  examples  in  two  ways  and  explain  which  method  is  similar 
to  that  used  in  the  account  above:  A  quantity  of  goods  cost  $1298.04;  part  of  it  was 
sold  for  $466.13.     Find  the  gain  or  loss  if  the  cost  price  of  the  remainder  is  $935.03, 

7.  What  is  the  cost  price  of  the  goods  sold } 

8.  What  is  the  gain  per  cent .'' 

9.  Why  is  the  "  Inventory  "  entered  in  red  ink  ? 

10.  Why  is  the  "  Inventory  "  carried  below  the  ruling  ? 

11.  Why  is  not  the  gain  carried  below  the  ruling  .? 

8 


MERCHANDISE  ACCOUNT   WITH    INVENTORY  9 

Required  of  the  Student.  —  Following  the  form  on  page  8,  enter  the  transactions  of 
Examples  2,  8,  and  4.  In  each  case  find  the  gain  or  the  loss.  Close  the  account  and 
bring  down  the  inventory. 

Example  2.  —  The  purchases  of  mdse.  are  as  follows  :  Feb.  1,  19 — ,  $  829.10  ;  Feb.  2 
$216.50;  Feb.  5  $128.14;  Feb.  7  $185.12;  Feb.  12  $284.09.  The  sales  are:  Feb.  2 
$12.96;  Feb.  3  $87.50;  Feb.  4  $126.30;  Feb.  8  $14.25;.  Feb.  9  $226.35;  Feb.  10 
$62.25;  Feb.  12  $36.50;  Feb.  13  $48.60;  Feb.  14  $286.75.  Mdse.  on  hand  Feb.  15 
$  312.40.     Find  the  gain  or  loss. 

Example  3.  —  On  Feb.  2,  19 — ,  O.  E.  Grant  commenced  business  with  a  stock  of 
groceries  valued  at  $1260.75;  Feb.  5  bought  of  B.  J.  Krauss  Bros,  groceries  amount- 
ing to  $  1450.75  ;  Feb.  7  paid  freight  and  drayage  on  mdse.  $36.45  ;  Feb.  8  sold  J.  F. 
Stanley  groceries  $564.50;  Feb.  9  sold  to  M.  Vickory  groceries  $88.50;  Feb.  12  sold 
A.  H.  Hopkins  groceries  for  cash  $  845.90  ;  Feb.  18  sold  O.  F.  Heenzie  groceries 
$  324  ;  Feb.  14  bought  of  W.  F.  Durand  &  Co.  groceries  amounting  to  $  725 ;  Feb.  16 
paid  cash  for  freight  and  drayage  on  mdse.  $63,75;  Feb.  18  sold  W.  H.  Hentz  groceries 
$  853.62 ;  Feb.  20  the  value  of  unsold  merchandise  was  $  1890.20.  Close  the  account 
as  of  Feb.  20. 

Example  4.  —  In  this  example  write  up  two  accounts,  Cash  as  in  Lesson  I,  and  Mer- 
chandise as  in  previous  examples  in  this  lesson.     Feb.  1,  19 — ,  A.  B.  Jones  commenced 
business  with  cash  on  hand  $5000  ;  Feb.  2  bought  a  stock  of  mdse.  for  cash  $872.50 
Feb.  3  bought  mdse.  for  cash  $249.70  ;  Feb.  4  paid  cash  for  freight  on  mdse.  $14.76 
Feb.  5  sold  mdse.  for  cash  $  18.91;  Feb.  6  sold  mdse.  for  cash  $  30.80  ;  Feb.  7  sold  mdse 
for  cash  $  36.80  ;  Feb.  8  bought  mdse.  from  Central  Grocery  Company  for  cash  $  746.90 
Feb.  9  sold  mdse.  to  Wm.  Benson  for  cash  $  163.18  ;  Feb.  10  sold  mdse.  for  cash  $  92.80 
Feb.  11  sold  mdse.  for  cash  $  116.50  ;  Feb.  12  sold  mdse.  for  cash  $  224.96.     The  mdse. 
remaining  unsold  Feb.  12  was  valued  at  $  1250.     What  is  the  cash  balance  and  what  was 
gained  on  merchandise .''     Close  the  accounts  as  of  Feb.  15. 

QUESTIONS 

1.  When  is  the  profit  on  goods  made,  at  the  purchase  or  at  the  sale } 

2.  If  the  unsold  goods  were  sold,  on  which  side  of  the  account  would  the  record  be 
made } 

3.  What  price  is  used  in  figuring  the  unsold  goods,  cost  or  selling } 

4.  Why  is  this  price  used  } 

5.  In  the  above  examples  you  have  entered  the  unsold  goods  on  the  credit  side  in 
order  to  find  the  gain  or  loss.  How  could  you  find  the  gain  or  loss  by  recording  the  un- 
sold goods  on  the  debit  side } 

6.  What  was  debited  in  the  second  transaction  .''  What  was  credited  .-'  Are  these 
amounts  equal .''     (Ex.4.) 

7.  What  was  debited  Feb.  12  .?    What  credited  }    Are  these  amounts  equal .-'   (Ex.  4.) 

8.  In  business  when  you  buy  something  must  you  give  something .? 

9.  On  which  side  of  the  account  do  you  record  what  you  receive  ? 


10  BOOKKEEPING 

10.  On  which  side  what  you  dispose  of  ? 

11.  Must  these  amounts  equal  each  other? 

12.  Is  there  a  debit  for  each  credit,  not  counting  the  first  transaction  ?    (Ex.  4.) 

DEFINITIONS 

An  inventory  of  property  is  a  list  of  goods  together  with  the  prices  of  the  items. 
The  term  '^inventory  "  may  have  a  broader  meaning.  This  phase  of  it  will  be  discussed 
later.  Inventories  are  taken  at  the  end  of  the  year  or  whenever  it  becomes  desirable 
to  determine  the  loss  or  gain  of  the  business. 

In  the  preceding  examples  all  cash  and  merchandise  received  were  entered  on  the 
left-hand  side,  and  likewise  all  cash  and  merchandise  disposed  of  were  entered  on  the 
right-hand  side  of  the  accounts.  It  requires  but  little  thought  to  understand  that  the  two 
processes  —  receiving  and  disposing  of  things  of  value  —  have  such  an  opposite  effect 
on  the  business  that  the  records  of  them  should  be  kept  separate.  The  custom  of  plac- 
ing receipts  on  the  left  and  what  is  disposed  of  on  the  right  is,  however,  entirely 
arbitrary,  and  a  system  reversing  this  order  would  be  no  less  exact  theoretically  and  no 
more  difficult  in  practice.  The  general  rule  for  determining  what  to  debit  and  what  to 
credit  may  be  stated  as  follows : 

General  Rule.  —  Debit  what  you  receive,  or  zvJiat  costs  value.  Credit  what  you 
dispose  of,  or  wJiat  produces  value. 


LESSON    IV 

NOTES 

In  the  pre\nous  lessons  it  was  sometimes  stated  that  cash  was  paid  or  received  in 
settlement  of  purchases  or  sales.  In  other  transactions  no  method  of  payment  was 
mentioned.  It  frequently  happens  that  the  buyer  finds  it  inconvenient  to  make  imme- 
diate cash  payment  and  the  seller  agrees  to  accept  a  written  promise  to  pay  at  some 
future  time.  Such  promises,  when  made  out  in  proper  form,  are  called  promissory 
notes  or  simply  notes.  Notes,  as  you  will  see  later,  are  used  also  for  other  purposes 
than  that  explained  here. 

Transaction  illustrating  the  use  of  a  Note.  —  On  March  1,  19 — ,  Wm.  Thompson 
sells  to  Warren  Moore,  of  Milwaukee,  mdse.  amounting  to  $174.25.  Mr.  Thompson 
agrees  to  accept  in  payment  Mr.  Moore's  note,  due  in  30  days  with  interest  at  6  %. 

FORM  OF  NOTE 


./--A^-C-t-'^^    ^^^C-CZ^-Z^ after  date -di. promise  to  pay 

(^M<f<^'2^  J/^,.^'^:^/0-2^^^Z.<^^        ^or  order 

(Dy^hPJ'^yi:^...^.^-?:^^.^^ ,,,^£^.^  /M-    — nnllars 

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In  the  form  above,  Warren  Moore  is  the  maker  and  Wm.  Thompson  the  payee  of 
the  note.     The  maker  and  payee  are  called  the  parties  to  the  note. 

If  interest  is  to  be  paid  on  a  note,  it  must  be  mentioned ;  generally  this  is  entered 
after  the  words  "Value  received."  The  place  of  payment,  especially  if  it  is  a  bank,  is 
frequently  stated  in  the  note.     A  note  may  be  signed  by  two  or  more  persons. 

Write  the  notes  indicated  in  the  following  exercises. 

Use  slips  of  paper  about  8  x  3^  inches,  leaving  a  margin  of  one  inch  at  the  left. 

Example  1.  — John  Morris,  of  Boston,  Mass.,  gives  his  note,  dated  Mar.  15,  payable 
in  60  days,  to  Thomas  T.  Davis  for  $  288.90. 

Example  2.  —  On  Mar.  10,  19 — ,  M.  W.  Laflflin  gives  you  his  note  at  10  days  for 
1^28.50.     Use  the  name  of  your  town  in  the  heading. 

Example  3.  —  Using  the  date  of  writing  and  Philadelphia,  Pa.,  in  the  heading,  give 
your  note  at  60  days  favor  K.  P.  Towne  &  Co.  for  $1000,  payable  at  the  Importers' 
National  Bank. 

11 


12 


BOOKKEEPING 


Example  4.  —  Maker,  Chas.  Maxwell;  payee,  pupil;  time,  3  months;  date,  Mar.  12, 
19 — ;  place,  Indianapolis,  Ind.  ;  rate  of  interest,  6  %  ;  face,  ^350.  On  Apr.  11  a  pay- 
ment of  $100  was  made  on  this  note. 

If  part  payment  of  a  note  is  made,  it  is  customary  to  indorse  the  amount  on  the  back 
of  the  note. 

Example  h. — On  the  day  you  are  writing,  at  Cleveland,  Ohio,  Ernest  Wireman 
gives  his  note  in  your  favor,  payable  one  year  after  date,  interest  5  %,  face  $  600. 

The  payee  usually  holds  the  note  until  it  is  due  and  then  presents  it  for  payment. 
If  the  note  is  payable  at  a  particular  place,  the  note  should  be  there  when  it  becomes 
due  so  that  it  may  be  taken  up  and  canceled  when  paid. 

INDORSEMENTS 

If  for  any  reason  the  payee  of  a  note  wishes  to  dispose  of  it,  he  may  do  so  by 
writing  his  name  on  the  back  of  the  note  and  delivering  it  to  the  proper  party.  The 
writing  on  the  back  is  an  indorsement.  The  two  forms  most  frequently  used  are  illus- 
trated below.  They  are  designated  as  the  blank  and  the  full  indorsement.  The  latter 
names  the  party  to  whom  the  paper  is  transferred,  while  the  former  does  not. 

ON  BACK  OF  NOTE  — FORMS  OF  INDORSEMENTS 


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The  first  needs  no  further  indorsement  —  the  note  is  now  payable  to  bearer.  The 
second  must  be  indorsed  again  if  the  note  is  sold  by  Mr.  Shaw.  Every  note  received 
should  be  indorsed,  as  each  indorsement  adds  security  to  it.  Indorse  the  notes  written 
up  in  this  lesson.  For  the  first  and  second,  use  blank  indorsements ;  for  the  rest  use 
full  indorsements. 


NOTES  13 

QUESTIONS 

1.  What  is  a  promissory  note  ? 

2.  How  many  parties  are  there  to  a  note  ? 

3.  Name  and  define  each. 

4.  What  is  discounting  a  note? 

5.  In  what  business  is  the  buying  of  notes  a  very  important  feature  ? 

6.  What  name  is  given  to  the  difference  between  the  face  value  of  a  note  and  the 
amount  the  seller  must  accept  for  it  if  it  is  sold  before  it  is  due  ? 

7.  What  is  an  indorsement  ? 

8.  What  is  a  full  indorsement  ? 

9.  What  is  a  blank  indorsement  ? 

10.  What  is  the  meaning  of  the  words  "  indorser  "  and  "  indorsee  "  ? 

11.  What  are  the  purposes  of  an  indorsement  .'* 

DEFINITIONS 

A  note  is  a  written  acknowledgment  of  a  debt,  coupled  with  a  promise  to  pay. 

The  maker  of  a  note  is  the  one  who  issues  it ;  he  promises  to  pay  it  when  due. 

The  payee  is  the  one  to  whom  the  note  is  issued;  the  payment  is  to  be  made  to  him 
or  to  the  person  to  whom  he  orders  it  paid. 

An  indorsement  is  a  writing,  usually  upon  the  back,  to  show  a  transfer  or  to 
acknowledge  a  payment. 


LESSON   V 
BILLS    RECEIVABLE   ACCOUNT 

Introduction.  —  In  bookkeeping,  notes  are  divided  into  two  classes.  This  division  is 
not  due  to  any  peculiarities  in  the  notes  themselves,  but  is  entirely  dependent  upon  the 
relation  we  bear  to  them.  Those  that  are  signed  by  some  one  else  and  that  we  first 
receive  and  later  dispose  of  are  called  "bills  receivable."  Those  that  we  first  issue  and 
dispose  of  and  later  redeem  are  called  "  bills  payable."  Some  bookkeepers  prefer  to 
use  the  expressions  "notes  receivable"  and  "notes  payable."  It  is  immaterial  which 
names  are  used,  so  long  as  there  is  uniformity. 

TRANSACTIONS   WITH   BILLS   RECEIVABLE 

Required  of  the  Student.  —  Copy  Example  1  and  write  up  Examples  2  and  3,  close  the 
accounts,  and  have  them  approved. 

Example  1.  —  Mar.  1,  19 — ,  received  Smith's  note  for  $860;  Mar.  2  received  Doe's 
note  for  $548.75;  Mar.  4  received  Johnson's  note  for  $124.36;  Mar.  7  bought  two 
notes  of  Henry  Marx,  one  signed  by  himself  for  $  360,  and  one  signed  by  Charles 
Brown  for  $423.75;  Mar.  10  Smith  paid  us  cash  for  his  note  of  the  1st  inst. ;  Mar.  11 
Marx  paid  cash  on  his  note  $  200;  Mar.  12  sold  Doe's  note  for  cash  $543.75;  Mar.  15 
Johnson  paid  cash  for  his  note  of  the  4th  inst.  ;  Mar.  15  closed  the  account. 


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QUESTIONS 

1.  What  is  the  total  of  the  notes  received } 

2.  What  is  the  total  of  the  notes  disposed  of  1 

3.  When  cash  or  something  else  is  received  for  a  note,  what  is  done  with  the  note  ? 

4.  Was  Marx's  note  paid  in  full  on  the  11th  } 

5.  Was  the  note  in  this  case  disposed  of .-' 

6.  Why  was  the  $  200  entered  on  the  Cr.  side  of  "  Bills  Receivable  "  ? 

14 


BILLS    RECEIVABLE    ACCOUNT  15 

7.  What  indorsement  should  have  been  made  on  Marx's  note  on  Mar.  11  ? 

8.  What  does  the  balance  in  the  account  show  ?     How  could  you  verify  it? 

9.  Can  the  credit  side  of  this  account  ever  become  the  greater  ?     Why  ? 

10.  Why  is  the  "  Balance,"  when  carried  below  the  rulings,  entered  on  the  opposite 
side  ? 

11.  By  what  means  could  Marx  give  us  the  title  to  the  note  signed  by  Brown  ? 

12.  Will  a  business  man  take  any  one's  note  for  what  he  sells  .''     Will  he  take  cash .-' 

13.  What  things  are  considered  when  we  think  of  taking  a  person's  note  ? 

Example'^.  —  Mar,  1,  19 — ,  had  several  notes  on  hand  amounting  to  $2124.30; 
Mar.  2  sold  mdse.  to  Coe  &  Co.  for  their  note  $750.60;  Mar.  3  gave  cash  for  James 
White's  note  $  604 ;  Mar.  5  received  cash  for  one  of  the  notes  in  our  possession  on  the 
1st  $  624.30 ;  Mar.  6  Smith  &  Co.  sent  me  their  note  at  30  days  to  apply  on  account 
$600;  Mar.  7  sold  a  house  and  lot  for  note  amounting  to  $1600;  Mar.  9  James 
White  paid  cash  for  his  note  received  on  the  3d  inst.  $  604  ;  Mar.  11  sold  a  horse  and 
wagon  for  note  $  240  ;  Mar.  12'  Smith  &  Co.  paid  cash  for  their  note  of  the  6th  inst. 
What  is  the  balance  of  notes  on  hand  Mar.  15 } 

Example  3.  —  Mar,  1,  19 — ,  had  on  hand  other  persons'  notes  amounting  to 
$  1824,60  ;  Mar.  2  received  Wm.  K.  Boyd's  note  payable  in  3  days  for  mdse.  $  199.20 ; 
Mar,  3  Henry  Brownback  gave  me  on  account  a  note  signed  by  John  Davis  for  $88.25  j 
Mar.  5  Wm.  K.  Boyd  paid  cash  on  his  note  of  the  2d  inst.  $  99,20,  and  gave  me  a 
new  note  for  the  remainder;  Mar.  6  sold  mdse.  to  Wm.  Craft  amounting  to  $872.64, 
and  received  in  payment  John  Staufer's  note  due  in  5  days  $  300,  Roy  Langher's  note 
due  in  10  days  for  $400,  and  Craft's  note  at  5  days  for  the  balance;  Mar.  7  Elias 
Detweiler  paid  cash  for  his  note  of  Feb.  10  $960.75;  Mar,  8  Wilson  Benson  paid  cash 
for  his  note  of  Feb,  20  $85.75;  Mar.  11  Wm.  Craft  paid  cash  for  his  note  due  to-day. 

BUSINESS   PAPERS   TO   BE   WRITTEN 

You  are  the  person  doing  business  in  these  examples. 

1.  Write  the  note  received  from  Wm.  K,  Boyd  on  the  2d  inst.  Use  your  town  for 
heading  (Ex.  3). 

2,  Boyd's  note  is  paid  on  the  5th,  and  is  returned  to  Boyd  on  that  date.  Write  the 
following  crosswise  on  the  face  of  the  note  in  red  ink :  "  Paid  March  5,  19 — ."  The 
name  of  the  one  receiving  the  payment  may  follow,  but  it  is  not  necessary. 

3,  Write  the  note  received  on  the  3d  inst. ;  use  your  town  for  heading,  date  Mar,  1, 
19 — ,  John  Davis  maker,  Henry  Brownback  payee.  Indorse  in  full  to  yourself 
(Ex.  3). 

4.  Write  the  note  received  from  Marx  on  Mar.  7  signed  by  Charles  Brown,  Use 
a  full  indorsement  by  which  the  note  is  transferred  to  you  (Ex,  1). 


LESSON    VI 


BILLS   PAYABLE   ACCOUNT 

Required  of  the  Student.  — Copy  Example  1,  tracing  transactions  from  the  text,  and 
write  up  the  following  examples. 

Example  \. —  Mar.  1,  19 — ,  gave  my  note  for  mdse.  ^650;  Mar.  2  bought  horse 
and  wagon  for  note  at  10  days  $125;  Mar.  9  paid  cash  for  my  note  of  the  1st  inst. 
$  G.50  ;  Mar.  10  bought  for  note  mdse.  of  Brown  &  Co.  $  750.60  ;  Mar.  11  gave  my 
note  for  insurance  on  mdse.  $21.75;  Mar.  12  paid  cash  for  my  note  of  2d  inst.  due 
to-day ;  Mar.  15  paid  cash  in  part  payment  of  my  note  of  the  10th  inst.  $  150.60. 
Mar.  20  what  is  the  balance  of  bills  payable .-' 


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QUESTIONS 

1.  What  is  the  total  of  notes  issued  .-* 

2.  What  is  the  total  of  notes  redeemed } 

3.  Why,  if  there  is  a  balance,  must  it  always  be  entered  on  the  Dr.  side  of  this 
account  .-* 

4.  Could  you  verify  the  balance  as  in  bills  receivable .'' 

5.  Under  what  condition  are  the  two  sides  equal.'' 

Example  2.  —  Mar.  1,  19 — ,  notes  signed  by  me  in  possession  of  others  are  as 
follow:  Favor  of  Nicholas  Murray  due  in  5  days  $196.30;  favor  of  Geo.  Allen  due 
in  8  days  $248.12;  favor  of  S.  D.  Schoefield,  dated  Feb.  20  at  30  days  $569.18. 
Total,  $1013.60.  Mar.  2  bought  mdse.  from  Theo.  Tyson  $128.30,  and  gave  my  note 
at  3  days  in  payment ;  Mar.  3  gave  my  note  favor  Isaac  Jones  due  in  one  year  in  part 
payment  of  house  and  lot  $  1000  ;  Mar.  4  I  owed  Oscar  Bauer  $  132  on  account  and 
gave  him  my  note  at  10  days  in  payment;  Mar.  5  sold  mdse.  amounting  to  $200; 
received  cash  $71.70  and  my  note  favor  Theo.  Tyson  of  the  2d  inst.  for  balance; 
Mar.  G  paid  cash  for  my  note  favor  of  Nicholas  Murray  due  to-day  $  196.30  ;  Mar.  7 
gave  my  5-day  note  in  payment  for  mdse.  purchased  this  day  $938.40;  Mar.  9  paid 
cash  for  my  note  favor  Geo.  Allen  $  148.12,  and  gave  my  3-day  note  for  the  balance. 
Close  the  account  as  of  Mar.  10. 

16 


BILLS    PAYABLE    ACCOUNT  17 

In  the  examples  of  Lesson  V,  as  well  as  in  the  preceding  examples  of  this  lesson, 
all  the  notes  in  any  one  example  belong  to  the  same  class.  In  Examples  3  and  4  of 
this  lesson,  both  kinds  —  "bills  receivable"  and  "bills  payable"  —  occur.  Be  sure 
that  you  understand  clearly  what  determines  to  which  class  a  note  belongs. 

In  Example  3  write  up  both  the  bills  receivable  and  bills  payable  accounts  and  close 
them. 

Example  3.  —  Mar.  1,  19 — ,  bought  mdse.  amounting  to  ^796.80  and  gave  my  note 
in  payment;  Mar.  2  bought  from  Geo.  Klein,  Wm.  White's  note  at  10  days,  Klein's 
favor,  for  $  624.75  and  gave  in  payment  my  note  due  in  30  days  $  200  and  cash  for  the 
balance ;  Mar.  3  bought  mdse.  $  986.90,  gave  in  payment  my  note  due  in  10  days 
$362.15  and  White's  note  bought  on  the  2d  inst.  for  the  balance;  Mar.  4  sold  mdse 
to  Frank  Hendricks  $166.30  and  received  his  note  in  payment;  Mar.  6  paid  cash  fo'^ 
my  note  of  the  1st  inst.  due  to-day  $796.80;  Mar.  8  sold  mdse.  to  Jas.  Smith  for  $300, 
received  in  payment  a  note  signed  by  Walter  Brown,  Smith's  favor ;  Mar.  10  borrowed 
$  500  cash  on  my  note,  favor  LeRoy  Watson ;  Mar.  31  close  accounts. 

In  Example  4,  record  cash,  merchandise,  bills  receivable,  and  bills  payable  received 
and  disposed  of. 

Example  4.  —  Mar.  1,  19 — ,  bought  mdse.  on  my  5-day  note  amounting  to  $864.90; 
Mar.  2  bought  mdse.  amounting  to  $  388.66  and  paid  for  it  with  my  10-day  note ;  Mar.  4 
sold  mdse.  to  Alfred  Rowe  $248.60,  received  cash  $148.60  and  his  note  at  3  days  for 
the  balance ;  Mar.  5  sold  mdse.  for  cash  $  266.90 ;  Mar.  6  paid  note  of  the  1st  inst.  due 
to-day  by  giving  cash  $  64.90  and  a  new  note  due  in  10  days  for  the  balance  $  800 ; 
Mar.  7  Alfred  Rowe  paid  me  cash  for  his  note  of  the  4th  due  to-day;  Mar.  9  sold  mdse. 
to  Silas  Hooper  $466.22,  receiving  cash  $166.22  and  his  note  at  10  days  for  the 
balance ;  Mar.  10  bought  mdse.  on  my  note  at  20  days,  favor  Louis  Slocum  $  972.86 ; 
Mar.  12  sold  mdse.  for  cash  $28.19;  Mar.  14  received  Septimus  Down's  2-day  note  for 
mdse.  sold  him  to-day  $  649.20 ;  Mar.  16  paid  my  note  due  to-day,  dated  the  6th  inst., 
by  giving  cash  $  150.80  and  Down's  note  of  the  14th  for  the  balance  ;  Mar.  18  sold  for 
cash  all  mdse.  remaining  on  hand  $  872.50.  Follow  instructions  contained  in  Ques- 
tion 9, 

QUESTIONS   ON   EXAMPLE  4 

1.  What  is  the  rule  for  debiting  an  account.'' 

2.  What  is  the  rule  for  crediting  an  account .'' 

3.  What  did  you  debit  on  Mar.  1 }     What  did  you  credit.-' 

4.  Were  these  debits  and  credits  equal .'' 

5.  What  did  you  debit  on  Mar.  2  .?     What  did  you  credit .-' 

6.  Were  these  debits  and  credits  equal .'' 

7.  Will  the  total  debits  for  the  first  and  second  transactions  equal  the  total  credits 
for  the  same  dates  .'' 

8.  In  this  example  how  many  accounts  are  kept .-'     Was  a  record  kept  of  every- 
thing received  or  disposed  of  .'' 

9.  Write  the  names  of  these  four  accounts  in  a  vertical  column,  following  each 


18  BOOKKEEPING 

account  by  its  total  debit  and  total  credit  in  columns,  and  add  these  two  columns.     How 
do  they  compare  ?     Why  ? 

10.  You  may  now  close  the  accounts  in  Example  4,  using  as  a  closing  date  Mar.  31, 
19—. 

DEFINITIONS 

Bills  Receivable  are  other  people's  notes — notes  signed  by  others  —  the  value  of 
which  we  are  to  receive. 

Bills  Payable  are  our  own  notes  —  notes  signed  by  us  —  the  value  of  which  we 
must  pay. 

^. 

V 


LESSON    VII 

COMBINATION   OF    ACCOUNTS 

Required  of  the  Student.  — The  following  exercises  contain  transactions  involving  the 
receipt  and  disposal  of  notes,  in  addition  to  cash  and  merchandise.  In  the  first  exercise 
the  pupil  will  open  accounts  for  bills  payable,  bills  receivable,  and  merchandise;  in  the 
remaining  exercises  an  account  is  also  to  be  kept  with  cash. 

Example  1.  —  Mar.  1  gave  my  note  payable  in  10  days  for  mdse.  ^1000;  Mar.  2 
bought  mdse.  from  Raymond  &  Co.  for  $  620  and  gave  my  note  at  5  days  in  payment ; 
Mar.  4  gave  my  30-day  note  favor  S.  K.  Wolff  &  Co.  for  mdse.  purchased  this  day 
;^  318.50;  Mar.  6  sold  mdse.  amounting  to  $66.20  to  John  Lyman  and  received  his  5- 
day  note  in  payment ;  Mar.  7  my  note  dated  the  2d  inst.  is  due  to-day,  I  paid  cash  for 
it  $620  (what  does  the  business  receive.?);  Mar.  8  sold  mdse.  to  K.  H.  Wampole  &  Co. 
$  138.60  and  received  their  note  at  10  days  in  payment ;  Mar.  11  received  cash  from 
John  Lyman  for  his  note  due  to-day  $66.20;  Mar.  12  sold  mdse.  for  cash  $411.50; 
mdse.  unsold  is  valued  at  $  1300.     Close  the  accounts  as  of  Mar.  15. 

QUESTIONS 

1.  Can  you  determine  from  your  work  the  value  of  the  notes  receivable  on  hand  ? 

2.  The  value  of  the  notes  payable  outstanding  } 

3.  Are  these  accounts  in  this  respect  like  cash,  or  merchandise  } 

4.  Would  you  explain  the  closing  entry  as  "Balance"  or  "  Loss  and  Gain  "  .-'     Why? 

Example  2.  —  Mar.  1  commenced  business  with  cash  $  1750 ;  Mar.  2  bought  mdse. 
on  my  note  $412.50;  Mar.  3  bought  mdse.  for  cash  $366.18;  Mar.  4  sold  mdse.  to 
Samuel  Reynolds  on  his  5-day  note  $  136.20  ;  Mar.  5  sold  mdse.  to  L.  K.  Parker  $81.60 
and  received  his  10-day  note  in  payment ;  Mar.  6  bought  mdse.  from  Wilson  Meyers 
$517.50,  gave  in  payment  Samuel  Reynolds's  note  received  on  the  4th  inst.  and  my  note 
at  3  days  for  balance  $  381.30 ;  Mar.  8  sold  mdse.  for  cash  $  12.72 ;  Mar.  9  paid  cash 
for  my  note  of  the  6th  inst.  $381.30;  Mar.  10  sold  entire  stock  of  mdse.  to  M.  S.  Way 
on  10-day  note  $  1250.     Mar.  10  close  all  the  accounts. 

Example  3. —  Mar.  1  commenced  business  with  mdse.  on  hand  $2000,  cash  $2200; 
Mar.  2  bought  mdse.  for  cash  $  600 ;  Mar.  5  bought  mdse.  on  my  10-day  note  $  800 ; 
Mar.  7  sold  mdse.  on  15-day  note  $112.60;  Mar.  9  sold  mdse.  for  cash  $72.21;  Mar. 
11  gave  my  30-day  note  for  mdse.  bought  to-day  $  700  ;  Mar.  13  sold  mdse.  on  20-day 
note  $  124.86 ;  Mar.  14  sold  mdse.  for  cash  $  34.19 ;  Mar.  15  paid  cash  for  my  note 
of  5th  inst.  $800;  Mar.  17  paid  cash  for  insurance  on  mdse.  $37.50;  Mar.  19  bought 
mdse.  for  cash  $450;  Mar.  20  sold  mdse.  for  cash  $91.27;  Mar.  21  exchanged  notes 
with  Silas  Sharpless  each  for  $  500  at  30  days ;  Mar.  22  received  cash  for  note,  my 
favor,  dated  Mar.  7  $  112.60  ;  Mar.  23  received  cash  from  insurance  company  for  mdse. 
damaged  by  fire  $  721.50 ;  Mar.  25  sold  remaining  stock  of  goods  for  cash  $  2750. 
Mar.  31  close  all  accounts. 

19 


20  BOOKKEEPING 

QUESTIONS 

1.  In  how  many  of  the  accounts  of  Examples  2  and  3  did  you  use  "Balance"  for 
the  closing  entry  ?     "  Loss  and  Gain  "  ? 

2.  In  Example  2  how  many  of  the  balances  were  carried  below  on  the  debit  side  ? 
On  the  credit  side  ? 

3.  Which  of   these   balances   show  values  the   business   had   on    hand  ?      Which 
amounts  is  the  business  under  obligations  to  pay  ? 

4.  How  much  is  the  business  worth  on  Mar.  10  ? 

5.  With  how  much  cash  was  the  business  commenced  ? 

6.  How  much  was  gained  ? 

7.  How  does  this  compare  with  the  amount  of  the  closing  entry  in  merchandise  ? 

8.  Find  the  gain  or  loss  in  Example  3  by  considering  cash,  bills  receivable,  and  bills 
payable,  and  compare  your  result  with  the  amount  of  the  closing  entry  in  merchandise. 


LESSON    VIII 


PERSONAL   ACCOUNTS 

Introduction.  —  All  the  transactions  of  the  foregoing  lessons  are  exchanges  of  values 
represented  by  someth^g  tangible — cash  or  notes  are  given  in  exchange  for  mdse.,  etc. 
But  goods  are  frequently  sold  and  delivered,  it  being  understood,  if  not  specifically 
stated,  that  the  buyer  will  pay  for  them  at  some  future  time.  Such  sales  are  said  to  be 
made  on  account  or  on  credit.  Such  transactions  make  it  necessary  to  keep  a  record 
of  dealings  with  persons.  In  the  transactions  of  former  lessons  no  attention  was  given 
to  the  names  in  making  the  records.  The  following  examples  contain  illustrations  of 
transactions  on  account. 

Required  of  the  Student.  —  Copy  the  first  form  and  write  up  Examples  2  and  3. 

Example  1.  —  Business  transacted  with  A.  B.  Campbell,  Ada,  O.  Apr.  1  sold  him 
mdse.  on  account  $36.84;  Apr.  3  sold  him  on  account  mdse.  ;$  41.14;  Apr.  6  received 
from  him  cash  on  account  $  30 ;  Apr.  8  he  has  worked  for  me  five  days  at  $  4  per  day 
and  asks  to  be  credited  on  account;  Apr.  9  he  returns  part  of  goods  purchased  as 
unsatisfactory  $  11.14;  Apr.  10  sold  him  bill  of  goods  for  which  he  is  to  pay  in  2  days 
;^  29.37  ;  Apr.  12  he  pays  for  bill  of  goods  of  the  10th  inst.  $29.37. 

The  form  below  shows  how  these  transactions  will  appear  under  Mr.  Campbell's 
account.  Always  include  the  address  with  personal  accounts.  The  pupil  should  not 
consider  his  study  of  this  example  and  the  accompanying  form  complete  until  he  has  a 
clear  idea  of  the  meaning  of  the  phrase  "  on  account." 


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QUESTIONS 

1.  On  which   side  of  Campbell's  account  are  amounts   that  he   received  from  us 
recorded .'' 

2.  On  which  side  of  Campbell's  account  are  amounts  that  we  received  from  him 
recorded  1 

3.  Does  this  account  show  that  we  have  become  indebted  to  him,  or  he  to  us  } 

4.  Is  this  account  closed  like  merchandise,  or  cash,  bills  receivable,  etc. .-' 

21 


22  BOOKKEEPING 

5.  May  the  balance  to  close  a  personal  account  appear  on  the  Dr.  side? 

6.  Does  this  account  show  a  loss  or  a  gain,  or  a  balance  due? 

7.  Does  Campbell  owe  us  or  do  we  owe  him? 

8.  What  does  "on  account"  mean? 

9.  Will  a  merchant  sell  to  any  one  on  account? 

10.  Give  reason  for  your  answer  to  Question  9. 

11.  What  does  a  merchant  consider  before  selling  to  one  on  account? 

Example  2.  —  Dealings  with  E.  B.  Jones  :  On  April  1,  19—,  he  owed  me  a  balance 
of  $36.41 ;  Apr.  2  sold  him  on  account  mdse.  amounting  to  $62.50 ;  Apr.  3  he  returned 
mdse.  amounting  to  $6.40  ;  Apr.  4  sold  him  mdse.  $72.80;  Apr.  5  allowed  him  a  claim 
for  shortage  on  his  purchase  of  the  4th  inst.  $9.85;  Apr.  6  he  paid  me  cash  for  the 
balance  due  on  Apr.  1,  $36.41 ;  Apr.  7  received  his  note  due  in  30  days  $56.10 ;  Apr.  8 
sold  him  mdse.  $52.80;  Apr.  9  bought  from  him  on  account  a  horse  and  wagon  for 
$360;  Apr.  10  gave  him  credit  for  a  bill  for  dehvering  goods  to  date  $6.20;  Apr.  11 
gave  him  in  payment  of  horse  and  wagon  my  note  due  in  60  days  $303.90  and  his  note 
received  on  the  7th  inst.  ;  Apr.  12  he  paid  me  cash  for  the  purchase  of  Apr.  4  less  the 
allowance  for  shortage.     Close  the  account  as  of  Apr.  13, 

Example  3.  —  Keep  accounts  with  cash,  merchandise,  bills  payable,  and  all  persons 

whose  names  occur.     Apr.  1, 19 — ,  cash  on  hand  $  800,  mdse.  $  1500  ;  Apr.  2  bought  mdse. 

on  account  from  K.  G.  Towne  &  Co.  $316.90;  Apr.  3  sold  J.  T.  Newcomb  on  account 

mdse.  $66.20;  Apr.  5  sold  mdse.  to  W.  E.  Harley  on  account  $49.80;  Apr.  7  paid 

K.  G.  Towne  &  Co.  on  account  cash  $116.90;  Apr.  9  sold   mdse.  for  cash  $54.60; 

Apr.  12  bought  from  W.  E.  Harley  mdse.  on  account  $92.35;  Apr.  15  J.  T.  Newcomb 

paid  cash  on  account  $33.10;    Apr.  16  W.   E.  Harley  returned  goods  amounting  to 

$12.29;  Apr.  18  gave  K.  G.  Towne  &  Co.  on  account  10-day  note  for  $100;  Apr.  20 

J.  T.  Newcomb  paid  cash  to  balance  his  account ;  Apr.  21  mdse.  unsold  $  1700.     Close 

all  accounts  as  of  Apr.  21. 

QUESTIONS 

1.  To  whom  is  the  balance  due  if  the  personal  account  shows  a  debit  balance  ? 

2.  To  whom  if  it  is  a  credit  balance  ? 

3.  How  is  a  debit  balance  shown  when  the  account  is  closed  ? 

4.  How  is  a  credit  balance  shown  when  the  account  is  closed  ? 

5.  In  Example  3  how  does  the  sum  of  the  debit  balances  compare  with  the  sum  of 

the  credit  balances  ? 

DEFINITION 

A  personal  account  is  one  kept  with  a  person  or  firm.  Its  balance  shows  the 
amount  due  us,  or  the  amount  we  owe  the  firm  in  whose  favor  the  balance  appears. 

GENERAL  RULES  FOR  PERSONAL  ACCOUNTS 

We  debit  a  personal  account : 

WJieji  a  person  gets  anything  from  us  on  account. 
We  credit  a  personal  account : 

VVJien  we  get  anything  from  a  person  on  account. 


LESSON    IX 
SUNDRY    ACCOUNTS 

Introduction.  —  This  lesson  includes  accounts  with  the  following:  Real  estate, 
expense,   loss  and  gain,  and  proprietor. 

A  real  estate  account  is  kept  to  show  the  cost  and  returns  of  such  properties  as 
farms,  stores,  residences,  etc.  In  some  cases,  however,  it  may  be  desirable  to  use  instead 
of  "real  estate,"  a  special  title  to  designate  a  certain  property;  as,  "House  and  Lot, 
130  Madison  Ave.,"  "  160-acre  Farm  at  Vernon,  111."  This  account,  and  in  fact  all 
property  accounts,  are  so  similar  to  the  merchandise  account  that  a  clear  comprehension 
of  the  latter  renders  the  meaning  of  all  comparatively  simple.  If  the  property  is  sold, 
the  account  closes  to  "  Loss  and  Gain,"  that  is,  the  difference  between  the  two  sides  is 
the  gain  or  the  loss.  If  property  remains  on  hand  at  the  time  of  closing  the  ledger,  its 
value  is  entered  as  an  inventory  in  the  usual  manner,  and  the  account  is  then  closed  to 
"  Loss  and  Gain." 

Expense  is  the  name  of  an  account  under  which  are  recorded  the  expenses  of 
running  a  business.  The  items  are  nearly  always  cost  items  and  appear  on  the  debit 
side.  At  times  an  expense  item  is  disposed  of  and  the  account  is  credited  with  this 
amount.  The  expense  account  may  be  subdivided  under  several  headings,  such  as  rent, 
wages,  selling  expense,  buying  expense,  freight,  etc.  There  is  practically  no  Umit  to  the 
number  of  subdivisions  of  the  expense  account.  Whenever  it  becomes  desirable  to  keep 
a  separate  record  of  any  class  of  expense  items,  an  account  may  be  opened  for  that  pur- 
pose. Almost  every  line  of  business  develops  peculiar  classes  of  such  items  that 
demand  separate  accounts. 

If  a  portion  of  the  cost  charged  to  an  expense  account  —  as,  for  example,  rent  paid 
in  advance  —  is  still  available  at  the  time  of  closing  the  ledger,  it  is  entered  in  red  ink  as 
an  inventory  on  the  credit  side  of  the  account,  and  the  account  is  then  closed  to  "Loss 
and  Gain,"  the  difference  being  the  cost  of  conducting  the  business  for  the  past  period. 

At  times  an  item  that  for  the  past  period  should  be  charged  to  the  expense,  or  some 
similar  account,  has  not  been  presented  at  the  time  of  closing  and  the  amount  is  entered 
in  red  ink  as  an  inventory  on  the  debit  side  of  the  account.  This  account,  then,  may 
have  inventories  on  both  sides.  These,  like  all  other  inventories,  are  brought  down 
below  the  red  line  ruHngs  and  become  balances  for  the  next  period. 

The  loss  and  gain  account  is  a  summary  account — one  to  which  all  the  loss  and 
gain  differences  of  the  several  accounts  that  have  been  closed  to  "Loss  and  Gain"  are 
transferred.  The  losses  are  entered  on  the  debit  side  of  this  account  and  the  gains  on 
the  credit  side. 

This  account  is  closed  to  the  proprietor's  account.  If  the  account  shows  a  credit 
balance,  the  account  is  closed  by  a  debit  entry  and  the  amount  is  carried  to  the  credit 
side  of  the  proprietor's  account.     The  reverse  is  true  if  the  account  shows  a  loss. 

23 


24 


BOOKKEEPING 


If  there  are  partners  in  the  business,  the  loss  or  gain  is  distributed  among  the 
several  persons  interested. 

The  proprietor's  account  is  a  personal  account  representing  the  amount  that  has  been 
invested  by  the  proprietor  in  the  business.  It  is  credited  because  the  business  owes 
the  proprietor  for  it  just  as  it  owes  any  other  person  from  whom  it  receives  anything  of 
value  on  account.  It  is  charged  with  withdrawals  and  losses  and  credited  with  addi- 
tional investments  and  gains.  At  the  time  of  closing  the  ledger  this  account  is  debited 
or  credited  with  the  closing  difference  of  the  loss  and  gain  account.  That  is,  if  the  loss 
and  gain  account  shows  a  net  gain,  the  proprietor's  account  is  credited;  if  a  net  loss,  it 
is  debited.  After  closing,  the  account  shows  the  present  worth  of  the  proprietor's 
interest  in  the  business.  This  is  because  the  business  cannot  have  anything  of  itself. 
Whatever  it  gains  above  expenses  it  owes  to  the  investor;  therefore  he  is  credited,  just 
as  others  whom  the  business  owes  are  credited.  If  there  is  a  loss,  the  proprietor  must 
make  it  good  to  the  business,  so  he  is  debited  as  others  are  when  the  business  has  some- 
thing due  from  them. 


REAL   ESTATE   ACCOUNT 

Example  1.— July  1,  19—,  bought  a  farm  of  160  acres  at  $25  per  acre,  paying 
cash;  July  5  paid  for  repairing  fences  ^75.60;  July  8  received  rent  for  past  three 
months  in  cash  $125;  July  15  paid  cash  for  painting  barn  $18.75;  July  30  sold 
farm  at  $35  per  acre,  receiving  cash  $1000  and  note  with  interest  for  the  balance 
due  in  one  year,  secured  by  mortgage.  Write  up  the  account  and  close  it  as  of 
July  31,  lU— . 


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Example  2. — July  1,  19 — ,  paid  rent  of  store  for  one  month  $125;  July  7  paid 
cash  for  clerk  hire  for  week  ended  to-day  $21.75;  July  9  paid  cash  for  advertising 
in  yesterday's  Tribune  $35;  July  10  paid  cash  for  cleaning  up  store  $3.75;  July 
12  paid  cash  for  5  tons  of  coal  at  $7;  July  15  paid  clerk  hire  for  last  week 
$21.75;  July  20  paid  for  postage  $4.26;  July  21  paid  clerk  hire  for  week  ended 
to-day  $21.75.  On  July  31  I  desire  to  know  the  cost  of  expense  for  the  month  of 
July.  I  have  not  paid  the  last  week's  hire  amounting  to  $26.30.  Coal  on  hand 
valued  at  $  38. 


SUNDRY  ACCOUNTS 


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Example  3.  —  This  is  a  continuation  of  Example  2.  Enter  debits  and  credits  under 
the  balances  brought  down.  Add  in  the  balances  when  closing  the  account  at  the  end 
of  the  month. 

• 

Aug.  1  Paid  rent  for  one  month  $  125. 

2  Paid  for  July  balance  unpaid  clerk  hire. 

3  Paid  for  advertising  $18.75. 

4  Paid  for  repairs  to  shelving  ;$  14.60. 

5  Paid  for  cleaning  up  store  $2.50. 

6  Sold  one  ton  of  coal  to  Robert  Thompson  for  cash  ^7.50. 

7  Paid  for  postage  stamps  $3. 

15  Paid  for  clerk  hire  to  date  $36.75. 

16  Received  cash  for  postage  stamps  $1.20. 
18  Paid  drayage  bill  on  store  fixtures  $  8.75. 
24  Paid  for  advertising  S  20. 
31  Find  the  expense  for  August;  the  inventories  affecting  the  account  are: 

Coal  on  hand  valued  at  $  21.50. 

2  weeks'  clerk  hire  unpaid,  same  as  paid  on  loth. 


LOSS   AND   GAIN  ACCOUNT 

Example  4.  —  The  items  included  in  the  following  "  Loss  and  Gain"  account  include 
all  losses  and  gains  as  shown  in  forms  in  previous  lessons.  It  shows  how  the  loss  and 
gain  items  are  collected  under  one  head  instead  of  being  carried  down  as  balances. 
The  balance  of  the  loss  and  gain  account  is  carried  to  the  proprietor's  account.  The 
names  of  the  several  accounts  in  which  the  gains  and  the  losses  originated  are  used  as 
explanations  in  this  account.  The  proprietor's  name  is  the  explanation  for  the  closing 
entry. 


26 


BOOKKEEPING 


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Exaviple  5.  —  Collect  under  a  loss  and  gain  account  all  the  losses  and  gains 
shown  in  examples  that  you  have  written  up  in  previous  lessons,  not  including  the 
model  forms.  Close  the  account  by  writing  your  name  in  the  smaller  side  in  red  ink, 
but  do  not  transfer  the  difference  until  a  later  account  is  complete. 


PROPRIETOR'S   ACCOUNT 


Example  6. — July  1,  19 — ,  D.  E.  Borg  commenced  business  with  a  cash  capital  of 
$2000  ;  July  15  he  drew  out  for  personal  use  $  150;  July  16  he  invested  an  additional 
sum  of  $  500.  His  profit  is  shown  in  Example  4  of  this  lesson.  It  is  now  transferred 
to  this  account.     The  f ollowijig  is  a  complete  record  of  his  transactions : 


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Example  1. — Open  an  account  with  your  name  as  a  heading.  July  1,  19 — ,  you 
invested  in  business  $3000;  July  5  you  drew  for  private  use  $75  ;  July  9  you  invested 
additional  capital  of  $  1200 ;  July  20  you  withdrew  from  the  business  $  900.  You  closed 
your  account  as  of  Aug.  31,  first  crediting  or  debiting  your  account  with  "  Loss  and 
Gain  "  shown  in  Example  5  of  this  lesson.  Close  the  account  to  "  Balance  "  and  bring 
the  amount  down. 

QUESTIONS 

1.  What  amounts  are  entered  on  the  Dr.  side  of  real  estate.?     The  Cr.  side  ? 

2.  On  the  Dr.  side  of  expense .-'     The  Cr.  side  ? 

3.  What  are  the  advantages  of  dividing  the  expense  account.? 

4.  What  four  av;counts,  including  expense,  do  you  suggest  for  the  transactions  of 
Examples  2  and  3  of  this  lesson  ? 


SUNDRY   ACCOUNTS  27 

5.  Write  up  the  transactions  of  Example  2,  using  the  four  accounts  suggested,  and 
close  them. 

6.  How  many  of  the  accounts  show  gains  ?     Losses  ? 

7.  Is  the  net  loss  of  the  four  equal  to  the  loss  on  expense  as  written  up  before  ? 

8.  After  bringing  down  the  balances  write  up  Example  3  under  the  headings  used 
for  Example  2, 

9.  Where  is  the  gain  on  real  estate  entered  a  second  time  ? 

10.  Where  is  the  loss  on  expense  entered  a  second  'ame  ?     On  which  side?     Why? 

11.  What  is  the  closing  entry  of  the  loss  and  gain  account  ? 

12.  Where  is  the  amount  entered  a  second  time?     On  which  side?     Why  ? 

13.  What  is  the  closing  entry  of  the  proprietor's  account  ?     What  is  done  with  this 
closing  amount  ? 

14.  In  what  order  are  the  following  accounts  closed :  loss  and  gain,  proprietor's, 
and  expense  ? 


LESSON    X 
ENTERING   TRANSACTIONS   IN   THE   JOURNAL 

Introduction.  —  In  the  preceding  lessons  the  records  of  transactions  were  entered 
under  particular  headings  or  accounts.  The  results  thus  obtained  are  correct  in  so  far  as 
individual  departments  of  the  business  are  concerned.  But  if  no  other  records  of  trans- 
actions were  kept,  several  serious  defects  would  soon  reveal  themselves.  First,  it  is 
apparent  that  the  records  are  lacking  in  detail.  They  do  not  give  a  sufficiently  com- 
plete history  of  the  business  as  a  whole,  nor  even  of  individual  transactions.  Again, 
they  are  not  arranged  in  chronological  order.  The  work  cannot  be  readily  traced  from 
date  to  date. 

Journalizing  is  but  another  form  of  arranging  debits  and  credits.  The  entries  follow 
each  other  in  the  order  in  which  the  transactions  occur.  This  form  of  entry  is  also 
better  suited  for  giving  detailed  explanations  of  transactions.  At  present,  however, 
explanations  will  be  omitted. 

Ruling  for  Journal 


Explanation  of  Columns.  —  One  and  2  are  for  the  date,  month  and  day;  3  is  the  foHo 
column  and  contains  the  page  where  the  item  may  be  found  in  another  book,  generally 
the  ledger ;  4  is  for  the  name  of  the  debit  item  ;  5  is  for  the  name  of  the  credit  item ; 
6  and  7,  for  the  debit  money  amount,  dollars  and  cents ;  8  and  9,  for  the  credit  money 
amount,  dollars  and  cents. 

By  reference  to  the  above  form  it  will  be  seen  that  the  debits  and  credits  are 
arranged  somewhat  differently  from  the  ledger  forms  previously  used;  still  the  debits 
are  at  the  left  and  the  credits  at  the  right. 

A  journal  entry  records  a  debit  and  a  credit.  You  will  record  in  the  debit  space 
the  name  of  the  thing  that  you  receive,  or  the  name  of  what  costs  you  v^alue,  and  the 
amount  in  the  debit  money  column ;  and  in  the  credit  space  the  name  of  the  thing 
disposed  of,  or  the  name  of  what  produces  value,  and  the  amount  in  the  credit  money 
column.  There  may  be  several  debit  items  and  only  one  credit  item  or  the  reverse,  but 
the  total  on  one  side  must  equal  the  total  on  the  other  side. 

In  determining  the  debit  and  credit  items  of  a  transaction  you  must  look  at  it  from 
the  standpoint  of  the  business,  not  from  the  standpoint  of  the  proprietor  nor  from  your 
own  standpoint. 

28 


ENTERING  TRANSACTIONS    IN   THE   JOURNAL 


29 


Make  entries  in  the  journal  for  the  set  of  transactions  beginning  on  page  30. 

Follow  the  forms  given  below. 

In  the  first  transaction,  page  30,  E.  L.  Coe  invests  cash.  The  business  receives 
cash  ;  therefore  "  Cash  "  is  the  debit  item. 

The  business  receives  cash  from  E.  L.  Coe  —  that  is,  becomes  indebted  to  him; 
therefore  E.  L.  Coe,  proprietor,  is  to  be  credited. 

The  Journal  Record 


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In  the  second  transaction  the  business  pays  cash  for  rent  of  store.  This  is  an 
expense  to  the  business  —  it  costs  value.  The  debit  item  is  "  Expense."  At  the  same 
time  cash  is  paid  out.     "  Cash  "  is  the  credit  item. 


cS<:t:j6.^e^->^t.<££>^ 


The  Journal  Record 


C^^id^A^ 


^S 

^s 

In  the    third   transaction   the   business    purchases  wheat.     The    business  receives 

wheat  and  pays  out  cash. 

The  Journal  Record 


C^.-<£Ay 


In  these  transactions  debit  and  credit  the  names  of  commodities  bought  and  sold 
instead  of  the  general  name  "  Merchandise."  In  the  fourth  transaction  the  business 
buys  corn.     The  business  receives  corn  and  pays  out  cash. 


/^l/ 

/^^ 

The  Journal  Record 


^ 


(J^^-U:^^ 


^f^ 

Vf^ 

The  following  form  shows  how  these  journal  entries  will  appear  in  your  journal ; 
also  two  other  entries  are  made  as  models  of  journal  entries  that  may  have  several 
debits  or  several  credits. 


30 


BOOKKEEPING 


^ 


J 


/5 


fM:>/L£.<z^ 


(Scyi--yz^ 


(f^.^  G^Cy   {^J^^iyC>^6yU 


(3zZAA- 


(ZczAJiy 


CoAAy 


-r4/j 


^O 


SR 


^ 


ooo 


yj 


///v 


4/^=5 


6^^ 


rv.f 


so 


S/l 


As  the  journal  footings  appear  when  carried  forward  to  a  new  page 


/S 


J 


rvj 


so 


J 


r^j 


so 


Required  of  the  Student.  —  You  will  now,  beginning  with  the  first,  journalize  the 
following  transactions,  observing  the  form  just  given.  After  they  are  completed  and 
corrected,  copy  in  your  journal,  forwarding  the  totals  for  each  page. 

It  is  not  necessary  to  foot  up  the  columns  of  the  journal,  but  you  will  do  so  in  these 
exercises.  If  the  two  sides  do  not  foot  up  equally,  there  is  an  error  in  your  work.  The 
footings  will  be  found  valuable  in  testing  results  you  will  obtain  later. 

TRANSACTIONS  — SET   I 

May  1,  19 — ,  E.  L.  Coe  commenced  business  as  a  grain  dealer  with  a  cash  capital  of  $  2000. 
"     1  Paid  for  rent  of  office  for  one  month  in  advance  $  45. 
"     2  Bought  of  J.  F.  Stacey  for  cash, 

180  bu.  wheat  at  ^.80  $144. 

"     2  Bought  of  J.  S.  Gridley  for  cash, 

1200  bu.  corn  at  .41  492. 


ENTERING   TRANSACTIONS    IN    THE   JOURNAL  31 

May    4  Sold  Smith  Elevator  Company  for  cash, 

180  bu.  wheat  at  $  .861       $  155.70 

"       5  Bought  of  W.  J.  Durand  for  cash, 

300  bu.  corn  at  .45  135. 

450  bu.  wheat  at  .75  337.50     $   472.50 

"       6  Paid  cash  for  clerk  hire  to  date  $  16. 
"       8  Bought  of  Daniel  Borg  for  cash, 

500  bu.  corn  at  .45  225. 

250  bu.  wheat  at  .79  197.50 

1000  bu.  oats  at  .20  200.         $   622.50 

"       9  Paid  cash  for  weighing  and  measuring  grain  $  12. 
"     12  Sold  Smith  Elevator  Company  for  cash,  the  balance  of 

wheat  on  hand,  700  bu.,  at 
"     13  Bought  of  J.  A.  Stephens  for  cash, 

900  bu.  barley  at 
"     15  Sold  B.  J.  Knauss  Storage  Company  for  cash, 
1000  bu.  oats  at 

500  bu.  corn  at  .62  260.         $    540. 

"     15  Paid  cash  for  office  help  to  date  $  24.50. 
"     17  Bought  of  George  Bauman  for  cash, 

500  bu.  oats  at 

600  bu.  corn  at  .43  258.         $   363. 

"     19  Paid  cash  for  storage  on  grain  to  date  $  30.50. 
"     20  Bought  of  Fred  Holtkamp  for  cash, 

646  bu.  wheat  at 

324  bu.  barley  at  .271  89.10     $    592.98 

"     20  Sold  Brown  Bros.  &  Co.  for  cash, 

600  bu.  corn  bo't  on  17th  inst.  .40  240. 

"     22  Paid  cash  for  set  of  blank  books  $  6.75. 
"     23  Sold  B.  J.  Knauss  Storage  Company  for  cash, 

600  bu.  wheat  at  .861         517.50 

300  bu.  barley  at  .35  105.         $    622.50 

"     25  Bought  of  J.  F.  Stacey  for  cash, 

750  bu.  corn  at  .461  348.75 

"     27  Sold  for  cash, 

46  bu.  wheat  at  .50  23. 

2250  bu.  corn  at  .52  1170.         ^1193. 

"     29  Sold  for  cash, 

500  bu.  oats  at  .271  137.50 

924  bu.  barley  at  .35^  323.40     $    460.90 

"     30  Paid  each  for  storage  and  inspection  on  grain  for  bal- 
ance of  month  ending  to-day  $  30.50. 
"     31  Paid  cash  for  office  help  to  date  $  30.50. 
All  property  has  been  sold. 


.871 

612.50 

.28 

252. 

.28 

280. 

.62 

260. 

.21 

105. 

.43 

258. 

.78 

503.88 

.271 

89.10 

LESSON    XI 
TRANSACTIONS  —  SET  II 

Required  of  the  Student.  —  1.  Find  the*  amount  of  all  sales  and  have  the  results 
approved.  2.  Journalize  the  following  transactions,  following  the  instructions  given  in 
the  previous  lesson,  except  that  the  goods  bought  and  sold  will  be  included  under  one 
title,  i.e.  "Merchandise."  Freight  and  cartage  on  goods  bought  will  be  charged  to 
merchandise  in  this  set. 

June    1,  19 — ,  E.  E.  Gaylord  has  to-day  commenced  the  boot  and  shoe  business  with  a 
cash  capital  of  $  2500. 
"       1  Bought  of  Phelps,  Dodge  &  Co.  an  invoice  of  boots,  for  cash  $  760.25. 
"       2  Rented  fully  equipped  store  for  one  year  at  $  75  per  month,  payable  monthly 
in  advance.      Store  located  25  E.  Madison  St. 
Paid  first  month's  rent  in  cash  $  75. 
"       2  Paid  cash  for  a  safe  for  use  in  the  office  $60.     (Debit  Fixtures.) 
"       2  Paid  cash  for  freight  and  drayage  on  the  bill  of  goods  $12.75;  also  paid  cash 

for  advertisement  in  Daily  Times  $25.     (Debit  expense  for  the  latter.) 
"       3  Bought  of  Holden  &  Co.  an  invoice  of  boots  and  shoes  on  my  note  at  10  days, 

$965.80. 
"       5  Sold  James  Wright  for  cash, 

9  pr.  Ladies'  vici  kid  at  $2.30 

9  pr.  Ladies'  patent  colt  at  2.45 

9  pr.  Ladies'  patent  colt  button  at  2.45 

"       6  Insured  goods  in  store  for  $1000  and  paid  cash  for  premium  at  1  %,  $10.    (Exp.) 
"       7  Paid  clerk  hire  to  date  $  16.25. 
"       7  Sold  D.  E.  Borg,  for  his  note  due  in  12  days, 

24  pr.  Ladies'  patent  oxfords  at  2.10 

12  pr.  Men's  oxfords  at  2.371 

12  pr.  Boys'  vici  kid  button  at  1.30 

"     10  Sold  M.  E.  Brown  &  Co.,  for  note  due  in  15  days, 

6  pr.  Ladies'  vici  kid  at  2.35 

12  pr.  Ladies'  vici  kid  oxfords  at  2.10 

18  pr.  Ladies'  patent  colt  lace  at  2.60 

24  pr.  Ladies'  patent  colt  button  at  2.65 

24  pr.  Men's  vici  oxfords  at  2.40 

12  pr.  Men's  patent  colt  at  2.65 

12  pr.  Men's  patent  kid  congress  at  2.85 

24  pr.  Boys'  school  lace  at  1.25 

"     10  Sold  E.  F.  Scofield  for  cash, 

6  pr.  Boys'  school  at  1.20 

6  pr.  Boys'  school  button  at  1.25 

9  pr.  Misses'  school  at  1.25 

32 


TRANSACTIONS  —  SET   II  33 

June  12  Sold  B.  Cerveny  &  Bros.,  for  their  note  at  15  days, 

4  pr.  Ladies'  satin  slippers  at  $  2,87^ 

3  pr.  Ladies'  patent  kid  at  2.50 

24  pr.  Ladies'  French  kid  at  2.371 

18  pr.  Men's  patent  colt  at  2.62i- 

"     13  Paid  cash  for  my  note  of  the  3d  inst.  due  to-day. 

"     14  Sold  A.  A.  Brewer,  on  his  note  at  10  days, 

12  pr.  Men's  English  enamel  at  2.90 

12  pr.  Men's  English  enamel  button  at  2.95 

18  pr.  Men's  patent  kid  at  2.60 
"     14  Paid  clerk  hire  and  bookkeeper  for  services  to  date  $  24. 
"     16  Sold  W.  L.  Mayer  for  his  note  at  10  days, 

15  pr.  Men's  tan  oxfords  at  2.85 

18  pr.  Ladies'  tan  oxfords  at  1.95 
"     17  Sold  Pulver  &  Tobias  for  cash, 

3  pr.  Men's  patent  kid  oxfords  at  2.85 

2  pr.  Men's  vici  kid  congress  at  2.90 

3  pr.  Men's  patent  colt  oxfords  at  2.50 

4  pr.  Men's  vici  kid  lace  at  2.70 
"     17  Sold  H.  E.  Ives  for  cash, 

12  pr.  Men's  working  shoes  at  1.30 

"     19  Received  from  D.  E.  Borg,  cash  for  his  note  of  the  7th  inst.  due  to-day. 
"     19  Bought  of  Schoch  &  Foberg  lot  of  shoes  and  slippers,  giving  in  payment  my 

note  due  in  30  days  $  324.60. 
"     21  Sold  Edward  Taylor  for  cash, 

3  pr.  French  kid  shoes  at  2.65 

"     21  B.  Cerveny  &  Bros,  returned  the  following  goods  purchased  on  the  12th  inst., 
24  pr.- French  kid  shoes. 
They  asked  that  the  amount  be  indorsed  on  their  note  given  same  day.     (This 
is  part  payment  of  diV/s  receivable.) 
"     22  Sold  Pulver  &  Tobias  for  note  at  30  days, 

8  pr.  Ladies'  patent  kid  button  at  2.35 

8  pr.  Ladies'  patent  kid  lace  at  2.30 

12  pr.  Ladies'  patent  kid  congress  at  2.20 

8  pr.  Ladies'  patent  oxfords  at  2.25 

9  pr.  Boys'  school  at  1.22 
18  pr.  Misses'  school  at  1.30 

"     24  Received  from  A.  A.  Brewer  in  payment  of  his  note  of  the  14th  inst.  cash  $  50 

and  a  new  note  at  10  days  for  the  balance. 
"     24  Bought  of  The  Galloway  Company  a  job  lot  of  boots  and  shoes  for  our  note 

due  in  30  days,  ^225.10. 


34  BOOKKEEPING 

June  24  Sold  D.  E.  Borg  for  cash, 

2  doz.  Combination  polish  at  $  .62|- 

2  doz.  IXL  polish  at  .70 

2  gr.  Laces  at  .85 

24  Received  from  M.  E.  Brown  &  Co.,  in  part  payment  of  note  of  10th  inst.,  $20 

in  cash.      They  asked  an  extension  of  10  days  on  the  balance. 
26  Edward  Taylor  returned  one  pair  men's  French  kid  shoes  purchased  on  the 
21st.,  as  not  being  of  the  desired  size.     Refunded  him  cash  for  the  goods. 

26  Sold  James  Wright  for  cash, 
6  pr.  Men's  extra  patent  colt  at  3-12-2- 

27  B.  Cerveny  &  Bros,  paid  cash  for  balance  on  their  note  due  to-day.     (See  June 
21.) 

28  Sold  M.  K.  Knudson  for  his  note  at  10  days, 
36  pr.  Children's  at 
24  pr.  Men's  working  at 
12  pr.  Men's  box  calf  at 
12  pr.  Men's  vici  kid  at 

Inventory  of  unsold  property  : 
Office  safe  valued  at 
Merchandise  valued  at 


.621 

1.20 

2.15 

2.30 

58. 

1525.67 

LESSON   XII 
FIRST  PART  — INTEREST   ACCOUNT 

Introduction.  —  When  goods  are  bought  on  credit,  the  buyer  gets  the  benefit  of  the 
use  of  the  seller's  credit  until  the  goods  are  paid  for.  If  the  purchase  is  not  paid  when 
due,  it  is  legal  to  add  an  extra  amount  for  the  use  of  this  credit.  This  is  called  interest. 
If  a  note  is  written  with  interest,  it  draws  interest  from  the  time  it  is  dated ;  if  no  inter- 
est is  mentioned  and  the  note  is  not  paid  when  due,  it  draws  interest  from  the  due  date 
until  paid. 

The  interest  items  in  the  accompanying  transactions  are  entered  in  the  following 
form  : 

Example  1.  —  May  1,  paid  cash  ^3.25  for  interest  on  note;  May  2  received  cash 
$\.\^  for  interest  on  money  loaned;  May  5  paid  James  Smith  $103.21  for  note  and 
interest  due  to-day,  the  interest  being  $3.21;  May  6  H.  G.  Clark  paid  cash  for  his  note 
due  to-day,  face  of  note  $1000,  and  interest  $10.21.    The  account  is  closed  as  of  May  10. 


^:^^-n-i^^yL^<dyr 


/ 

J 

/o 


,=SiHJ  9cSt^.^/^6y 


3 

^ 
^ 

/V 

^0 

/o 


^    A/z/^ 


/6 


Required  of  the  Student.  —  Copy  Example  1  and  then  write  up  the  following 
example  : 

Example  2.  — May  4,  19 — ,  paid  cash  for  the  use  of  a  loan  $4.75;  May  5  Henry 
Smith  paid  us  cash  for  the  use  of  money  borrowed  $3.76;  May  7  paid  cash  to  Brown 
&  Co.  for  note  and  interest  due  to-day  $325.62,  the  face  of  the  note  being  $310;  May 
10  received  cash  for  several  notes  and  interest  due  to-day  $1264.75,  the  interest  being 
$64,75.     Close  the  account  as  of  May  15. 


QUESTIONS 

What  did  interest  cost  us.'' 

What  did  interest  produce.'' 

Was  it  a  loss  or  a  gain.''     How  much.'' 

Why  is  interest  paid.'' 

Has  interest  always  been  allowed  } 


6.    What  is  usury  } 


See  definition,  page  36. 
35 


36 


BOOKKEEPING 


SECOND   PART— DISCOUNT   ACCOUNT 

Introduction.  —  If  a  person  who  owes  us  on  account  or  on  his  note  desires  to  pay 
before  the  due  date  arrives,  it  is  customary  to  make  an  allowance  known  as  discount. 

Required  of  the  Student.  —  Complete  the  following  example,  close  and  rule  it  up : 


/f- 

yf- 

2^i?y 

/ 

/ 

^5 

Example  3.  —  May  1  Smith  &  Co.  paid  their  note  one  month  before  the  due  date 
and  were  allowed  a  discount  of  $1.25;  May  7  we  owed  M.  &  Co.  on  account  $320.50 
due  in  30  days,  on  paying  it  to-day  they  allowed  us  a  discount  of  1  %  $3.21;  May  9 
we  paid  our  note,  due  June  5,  less  G  %,  27  days,  face  of  the  note  $840  —  the  discount  is 
$x.x8.  May  10  we  held  B.  &  B.'s  note  for  $360,  due  June  3  ;  they  paid  cash  to-day  less 
discount  at  6  % — the  discount  is  $x.44.  May  16  A.  B.  Jones  owed  us  $275  on  account ; 
he  paid  to-day  less  a  discount  of  1  % — the  discount  is  $x.75.  Close  the  account  as  of 
May  20. 

QUESTIONS 

1.  What  is  the  total  of  the  debit  side.?     Of  the  credit  side.-" 

2.  What  is  the  difference.-' 

3.  Is  the  difference  a  loss,  a  gain,  or  a  balance.? 

4.  How  shall  the  account  be  closed.? 

As  interest  and  discount  are  so  similar  in  nature,  it  is  customary  to  enter  these 
items  in  one  account,  heading  it  "Interest  and  Discount."  In  the  following  example  both 
interest  and  discount  will  be  found.     Enter  under  one  heading  as  indicated. 

Example  4.  —  May  7  paid  cash  for  the  use  of  a  loan  $4,25;  May  8  Smith  &  Co. 
repaid  loan  of  $200  and  interest  on  it  $3.75 ;  May  9  paid  cash  to  James  White  for  note 
and  interest  due  to-day  $124.71,  the  face  of  the  note  being  $120;  May  10  we  allowed 
Brown  &  Co.  a  discount  of  $7.24  on  their  note  paid  to-day;  May  12  Ames  &  Co.  paid 
their  note  to-day  and  interest  $326.42,  the  face  being  $321 ;  May  15  we  prepaid  our  note 
of  $120  less  discount  of  $.96;  May  16  we  paid  our  note  favor  Jones  &  Bro.  less  a  dis- 
count of  $10.61.     May  20  close  and  rule  up  the  account. 

DEFINITIONS 

Interest  is  the  sum  paid  for  the  use  of  money  or  credit. 

Usury  is  the  taking  of  a  higher  rate  of  interest  than  the  law  allows.     Originally  the 
taking  of  interest  was  forbidden  by  law  and  those  doing  so  were  called  usurers. 
Discount  is  an  allowance  made  for  the  payment  of  a  debt  before  it  is  due. 


LESSON    XIII 
CLASSIFICATION   OF   BOOKS   OF   RECORD 

Introduction. —  Books  of  record  are  usually  divided  into  two  classes  —  original  and 
subsequent. 

Books  of  original  entry  contain  the  first  written  records  of  transactions.  Great  care 
should  be  exercised  in  making  these  records.  No  erasures  or  changes  should  be  per- 
mitted. If  errors  occur,  no  attempt  should  be  made  to  hide  what  has  been  done.  In 
case  of  litigation,  these  are  generally  the  only  records  accepted  as  evidence,  and  erasures 
or  changes  may  defeat  a  just  claim. 

Any  entries  made  from  the  original  records  are  subsequent  entries.  The  ledger 
and  usually  the  journal  contain  such  entries. 

According  to  another  method  of  classification,  books  are  either  principal  or  auxiliary. 
The  former  include  the  ledger  and  the  journal  and  books  of  original  entry  from  which 
items  are  transferred  to  the  ledger.  The  latter,  as  the  name  indicates,  are  helpers.  They 
are  used  mainly  for  classification  and  reference. 

The  day  book  is  frequently  referred  to  as  the  book  of  original  entry.  This  is  due  to 
the  fact  that  in  the  earlier  history  of  accounting  all  transactions  were  first  recorded  in 
this  book.  The  business  methods  of  the  present  time  have  necessitated  its  division. 
The  cash  book,  sales  book,  etc.,  are  branches  of  the  original  day  book  and  contain  all 
its  essential  features. 

The  record  of  a  business  transaction  must  contain  the  elements  of  a  contract. 

Although  the  day  book  is  rarely  found  in  its  entirety  in  the  modern  business  office, 
yet,  because  it  affords  an  exceptionally  good  drill  in  bookkeeping  forms  and  language,  it 
is  advised  that  the  transactions  of  Set  III  (page  39)  be  written  up  according  to  the 
form  on  the  following  page : 


37 


38 


BOOKKEEPING 


^a- 


'7 


({^ao-d 


July 


13 


13 


D.  C.  ATcyer  and  E.  E.  Anderson  have  this 
day  cotnmenced  the  grocery  business  luitli 
the  folhni'ing  investments  : 

D.  C.  Meyer  invests  cash 

E.  E.  Anderson  invests  storehouse  and  tot 
located  at  20  E.  Madison  St.,  valued  at 
and  fixtures  in  same  valued  at 

The  gains  and  losses  aj-e  to  be  shared 
equally. 


Bought  of  Franklin  McVeigh  or'  Co.  on  ac- 
count, 20  days,  an  invoice  of  groceries 
amounting  to 


Sold  A.  A.  B reiver,  on  % 

3  hbl.  S.  A.  sugar,  325  lb.  $  Jf.l2\ 

6    "        G.       "       340  lb.  4.60^ 

2  bg.  G.  R.  coffee,  128  lb.  .15 


A,  A.  Bretver  has  failed  in  business.  The 
goods  sold  to  him  on  the  3d  have  been 
returned. 


Paid  cash  for  freight  and  dray  age  on  goods 
returned  from  A.  A.  Brewer. 


Bought  from  Jcvne   6^    Co.,  Mdse.  as  pei 
itivoice.     Tertns,  Account  20  days. 


Gave  Jevne  d^"  Co.  on  account  our  fiote  due 

in  20  days  without  interest 
Carried  forward 


000 
135 


40 
93 
83 


84 
40 


000 


135 


204 


60 


172 


17. 


14 


360 


000 
069 


46 


46 


60 


40 


52 


LESSON    XIV 
TRANSACTIONS  — SET   III 

Required  of  the  Student.  —  Write  up  the  journal  for  the  following  transactions  and 
have  it  approved. 

If  the  day  book  has  been  written  up  as  suggested  in  Lesson  XIII,  use  your  own 
records  from  which  to  journalize.  The  journal  entries  should  contain  a  full  record  of 
all  purchases  from  persons  and  sales  to  them.  For  example,  refer  to  the  transaction  of 
the  6th  inst.  :  G.  E.  King  &  Co.  buy  mdse.  amounting  to  $190.28  and  pay  $50  on 
account.     The  first  entry  records  the  sale  thus  : 

G.E.King&-  Co.  $190.28 

Mdse.  $190.28. 

The  payment  of  cash  thus  : 

Cash  .  $50. 

G.  E.  King&  Co.  $50. 

By  this  method  King  &  Co.'s  account  will  show  the  full  record  of  the  sale  and 
payment. 

The  following  is  known  as  the  balance  method : 

G.  E.  King  &  Co.  $140.28 

Cash  50. 

Mdse.  $190.28 

July  1,  19 — ,  D.  C.  Meyer  and  E.  E.  Anderson  have  this  day  commenced  the  grocery 
business  with  the  following  investments  :  Meyer  invests  cash  $  2000  and 
Anderson  invests  the  building  and  lot  located  at  20  E.  Madison  St.,  valued 
at  $3000  and  fixtures  in  the  store  valued  at  $135.  The  gains  and  losses 
are  to  be  divided  equally. 

"      8.     Bought  of  Franklin  McVeigh  &  Co.  an  invoice  of  selected  groceries  amount- 
ing to  $1204.60  on  20  days'  credit. 

"      3.     Sold  A.  A.  Brewer  on  account, 

3  bbl.  Standard  A  sugar  325  lb.  each  at  (per  cwt.)  $4.12i 

6  bbl.  granulated  sugar  340  lb.  each  at  (per  cwt.)  4.60 

2  bg.  Golden  Rio  coffee  128  lb.  each  at  .15 

*'      3.     Sold  James  K.  Smith  on  account, 

2  bx.  laundry  soap  60/60  (60  bars,  60  lb.)  at  $3.80 

1  bx.  toilet  soap  100/6  (100  bars,  6  oz.  each)  at  4.15 

2  bbl.  salt  120  o-lb.  bg.  at  1.22 
2  bbl.  16  sk.  flour  at                                                                           5.60 

*'      5.     Bought  of  Jevne  &  Co.  a  bill  of  groceries  amounting  to  $680,  to  be  paid  for 
in  20  days, 

39 


40  BOOKKEEPING 

July    6.     Sold  G.  E.  King  &  Co.  on  account, 

5  bbl.  granulated  sugar  2-34U,  2-350,  1-360  lb.  at  $^.Q2 
2  bg.  Rio  coffee  128  lb.  each  at  .15 
2  bx.  American  cheese  1/40,  l/A^  lb.  at                                           .091 

2  ^-chests  Oolong  tea  60  lb.  each  at  .53 
They  paid  $50  to  apply  on  the  purchase. 

Note.  —  2-340  =  2  bbl.  of  3  l(t  lb.  each. 

"      7.     Returned  to  Jevne  &  Co.  goods  to  the  amount  of  $84  purchased  on  the  5th  inst. 

"      8.     Paid  clerks  and  bookkeeper  cash  for  services  to  date  $'66. 

"  8.  A.  A.  Brewer  has  failed  in  business,  but  we  were  able  to  reclaim  our 
goods  sold  on  the  3d  inst.  Paid  cash  for  drayage  and  freight  on  return 
of  these  goods  $14.60.     (Charge  the  drayage  and  freight  to  expense.) 

"      8.     James  K.  Smith  paid  cash  for  a  bill  of  goods  bought  on  the  3d  inst. 

"    10.     Paid  Chicago  Tribune  cash  for  advertising  $15.60. 

"    11.     Sold  W.  W.  Mason  on  his  note  due  in  10  days,  int.  6%, 

10  bbl.  Family  flour  at  $5.60 

4  mats  Java  coffee  150  lb.  each  at  .24|- 

"    12.     Sold  James  K.  Smith  on  account, 

10  bbl.  80  sacks  flour  at  $5.60 

6  bbl.  granulated  sugar  3-340,  2-350,  1-345  at  4.65 

4  bg.  Java  coffee,  75  lb.  each  at  .24| 
6  bg.  Golden  Rio  2-128,  1-130,  3-132  at  .18 

3  ^-chests  Oolong  tea  60  lb.  each  at  .52 
10  bx.  Family  soap  60/60  at  3.75 

Received  in  part  payment  cash  $100. 
*'    12.     Sold  Foberg  &  Stacey,  receiving  in  part  payment  note  at  10  days  for  $100 
interest  6  %,  balance  on  account, 

10  bbl.  Excelsior  flour  at  $5.20 

6  mats  Java  coffee,  150  lb.  each  at  .241 

5  bbl.  granulated  sugar  .3-340,  2-355  at  4.62 
2  bbl.  oyster  crackers  60  lb.  each  at  .08 

4  |-chests  Japan  tea  60  lb.  each  at  .48^ 

5  bx.  laundry  soap  at  3.10 
5  cases  Columbia  salmon,  20  doz.  (per  doz.)  at  1.30 
2  bbl.  Golden  Gloss  starch  160  lb.  each  at  M\ 

"  13.  Bought  of  Jevne  &  Co.  invoice  of  fancy  groceries  amounting  to  $1360.40  on 
account  20  days.  They  asked  as  an  accommodation  that  we  give  them 
our  note  for  $  1000  due  in  20  days.     We  issued  the  note. 

"    14.     Sold  Wyrick  &.  Conrad  on  account, 

24  lb.  Breakfast  cocoa  at  $  .32 

2  bx.  evaporated  apricots  25  lb.  each  at  .09 

2  bx.  London  layer  raisins  20  lb.  each  at  .08 

4  doz.  olives  pt.  bottles  at  2.35 


July 

15. 

<< 

15. 

<( 

15. 

(( 

16. 

<( 

17. 

<( 

18. 

<< 

19. 

(( 

19. 

"       09 


TRANSACTIONS  —  SET    III  41 

Sold  D.  E.  Borg  Bros.  &  Co.  on  account, 

10  bbl.  granulated  sugar  3-340,  8-345,  4-350  at  $  4.60 

James  K.Smith  remitted  his  check  to  apply  on  account  $  100  ;  also  G.  E.  King 

&  Co.  remitted  to  us  the  balance  due  on  their  purchase  of  the  6th  inst. 
Paid  clerks  and  bookkeeper  cash  for  services  for  one  week  to  date  $  3(1. 
Sold  W.  W.  Mason  a  job  lot  of  mdse.  amounting  to  $  220,  for  which  he  gave 

his  note  at  10  days,  interest  at  6  %. 
Sold  James  K.  Smith  on  account  mdse.  amounting  to  $  94.25. 
Paid  cash  for  taxes  on  our  store  property  for  this  year  $  45.     Dr.  Expense. 
Bought  of  Franklin  McVeigh  &  Co.  on  account  mdse.  $  603.90. 
D.  E.  Borg  Bros.  &  Co.  returned  goods  not  satisfactory  amounting  to  $  26.30 
bought  on  the  15th  inst.     They  paid  the  balance  of  the  bill  in  cash. 
21.     W.  W.  Mason  paid  his  note  dated  July  11  and  interest  due, 
Face  of  the  note  $  203. 

Interest  for  10  days  6  %  .xx 

Received  in  cash  $203.xx 

21.     James  K.  Smith  paid  us  cash  on  account  $100. 
Paid  cash  to  clerks  and  bookkeeper  to  date  $  36. 
"     22.     Foberg  &  Stacey  paid  their  note  and  interest  due  to  date  in  cash, 
Face  of  the  note  $  100. 

Interest  for  10  days  .xx 

Received  in  cash  $  lOO.xx 

"     22.     Paid  $  1000  cash  to  Franklin  McVeigh  &  Co.  to  apply  on  our  account. 
"     25.     Paid  Jevne  &  Co.  cash  for  a  bill  of  goods  purchased  on  the  5th  inst.  less 

goods  returned  on  the  7th  inst. 
"     26.     W.  W.  Mason  paid  his  note  of  the  16th  inst.  and  interest  due. 
Face  of  the  note  $  220. 

Interest  for  10  days  at  6  %  .xx 

Total  amount  received  $220.xx 

"     28.     James  K.  Smith  paid  cash  in  full  for  a  bill  of  goods  bought  on  the  17th  inst. 
"     29.     Paid  to  clerks  and  bookkeeper  to  date  $  36. 
"     29.     Bought  of  Franklin  McVeigh  &  Co.  on  account  mdse.    $  302.60 
"     31.     Sold  D.  E.  Borg  Bros.  &  Co.  on  account, 

2  bg.  Rio  coffee  128  lb.  each  at  $    .14 

2  bx.  laundry  soap  at  3.15 

2  cases  salmon  8  doz.  (per  doz.)  1.20 

"     31,     James.  K.  Smith  asked  for  a  statement  of  his  account  and  paid  the  balance 
due  in  cash. 

Inventory  of  Pivpcrties 

Merchandise  valued  at  $  2875. 

Store  and  lot  valued  at  3100. 

Fixtures  valued  at  122.50 


42  BOOKKEEPING 

ERRORS   AND   HOW   TO    CORRECT   THEM 

Make  up  your  mind  not  to  make  any  errors ;  this  determination  will  reduce  the 
number  of  them  to  a  minimum. 

1.  Do  not  erase  words  or  figures.  If  a  mistake  of  a  word  or  a  number  is  made, 
draw  a  red  line  through  the  part  in  error  and  write  the  correct  form  above. 

2.  If  an  entire  entry  is  incorrect,  as  a  day  book  record  or  a  sale,  draw  red  lines 
through  the  amount  in  the  total  money  column  and  write  "Void  "  at  the  left  in  the  folio 
column  and  reference  to  where  the  correct  entry  is  made,  thus,  "Void,  see  page  20." 

3.  Books  having  special  columns  should  never  be  totaled  and  ruled  up  until 
careful  tests  have  been  made  as  to  accuracy.  Some  of  the  columnar  books  are  suscep- 
tible of  proof. 

4.  If  an  item  is  posted  to  the  wrong  account  or  on  the  wrong  side  of  the  ledger, 
draw  a  red  line  through  the  part  in  error.  Never  correct  by  making  a  counter  entry 
on  the  opposite  side  of  the  account. 

5.  Never  correct  an  error  in  the  ledger  if  it  is  due  to  an  error  in  the  book  from 
which  the  item  was  posted  without  tracing  it  back  to  the  original  record  and  rectifying 
it  there  and  in  all  intermediate  records. 


LESSON    XV 

TRANSFERRING    ENTRIES    FROM   JOURNAL    TO    LEDGER 

Introduction.  —  The  journal  entries  of  Lesson  X  are  now  to  be  transferred  to  the 
ledger.     This  process  is  called  "  posting." 

"Why  Posting  is  Done.  —  In  the  journal  the  entries  occur  in  the  order  of  the  dates 
of  the  transactions.  The  final  object  of  bookkeeping  is  to  show  results  in  the  most 
convenient  form.  This  is  not  accomplished  in  the  journal.  For  example,  if  it  is 
desired  to  know  how  much  cash  has  been  received  or  paid  out,  it  is  necessary  to 
examine  all  the  entries  and  collect  all  items  for  which  cash  is  debited  or  credited.  How 
could  the  total  cost  of  wheat  be  determined  from  the  entries  of  Lesson  X  .-*  The  total 
sales  .-*  By  posting  the  entries  of  the  journal  to  the  ledger  the  necessity  of  picking  out 
items  is  avoided. 

How  Posting  is  Done. — You  are  familiar  with  the  ruling  of  a  ledger  page  and  the 
purpose  of  each  column.  The  journal  entries  show  the  names  of  the  ledger  headings 
under  which  items  must  be  placed,  also  on  which  side  of  the  page.  If  the  debit  of  the 
first  entry  is  to  be  posted,  the  "  Cash  "  heading  must  be  found  in  the  ledger.  On  the 
left  side,  in  the  first  space  under  the  heading,  enter  the  date  as  in  the  journal,  and  write 
the  amount  in  the  money  column.  Both  the  ledger  and  journal  are  provided  with  folio 
columns  In  this  column  in  the  journal,  place  the  number  of  the  ledger  page  to  which 
the  item  has  been  transferred.  In  the  ledger  folio  column,  place  the  number  of  the 
page  from  which  the  item  was  brought.  This  is  called  "  postmarking."  If  a  credit 
item  is  to  be  posted,  the  process  is  the  same  except  that  it  must  be  taken  to  the  credit 
side  of  the  ledger. 

Required  of  the  Student. — 1.  Begin  each  blank  book  with  page  1  and  number  all 
the  pages  in  the  book.     The  page  number  should  be  written  in  the  outer  upper  corner. 

2.  Write  the  following  headings  on  ledger  paper,  writing  the  first  one  on  the  light 
blue  line  at  the  top  and  skipping  the  number  of  spaces  indicated  by  the  number 
following  the  names  of  accounts.  If  there  is  not  enough  space  for  an  account  near  the 
bottom  of  the  page,  skip  the  space  and  write  the  heading  at  the  top  of  the  next  page, 
as  we  do  not  wish  to  begin  forwarding  accounts  at  this  time.  Every  ledger  page  should 
have  the  name  of  an  account  at  the  top.     The  accounts  are  as  follows : 

E.  L.  Coe,  Propr.,  6  spaces  :  Wheat,  10 ;  Corn,  10 ;  Oats,  8 ;  Barley,  6  ;  Expense, 
10 ;  Cash,  10 ;  and  Loss  and  Gain,  6. 

3.  Transfer  all  debit  items  from  the  journal  to  the  ledger  under  their  respective 
headings  or  accounts. 

4.  Transfer  all  credit  items  from  the  journal  to  the  ledger  under  their  respective 
headings  or  accounts. 

The  first  debit  item  is  cash  and  will  be  recorded  on  the  debit  side  of  the  cash 
account  thus  : 

43 


44 


BOOKKEEPING 


G^zdA^ 


77t^. 


?y 


/ 


^(p(p 


The  second  debit  is  expense  and  when  posted  to  the  debit  side  of  that  account  will 
appear  as  follows : 


'7- 


^J 


Do  not  fail  in  the  posting  of  each  item  to  record  in  the  folio  column  of  the  journal 
the  number  of  the  ledger  page  to  which  the  item  is  carried  and  in  the  folio  column  of 
the  ledger  the  number  of  the  journal  page  from  which  it  is  brought.  Care  in  this  par- 
ticular will  almost  eliminate  from  your  work  the  error  of  omitting  the  posting  of  an 
item  or  of  posting  items  twice. 

You  are  now  ready  to  post  the  credit  items.  The  credit  items  are  to  be  posted  on 
the  credit  side  of  the  respective  accounts  in  the  ledger. 

The  first  credit  item  is  E.  L.  Coe  and  when  posted  will  appear  as  follows : 

T 


The  same  folio  column  is  used  in  the  journal  for  both  debits  and  credits. 
now  post  the  remaining  credit  items. 


0(PO 


You  may 


A  TEST  OF  YOUR   POSTING 

After  the  items  of  the  journal  have  all  been  transferred  to  the  ledger  it  is  desirable 
to  know  that  the  work  has  been  correctly  done. 

Take  a  page  of  journal  paper  and  write  the  names  of  the  several  accounts  that 
appear  in  the  ledger  in  a  vertical  column,  the  total  debit  of  each  account  in  the  cor- 
responding debit  money  column,  and  the  total  credit  of  each  account  in  the  corresponding 
credit  money  column.  When  the  totals  of  all  the  accounts  have  been  entered,  the  totals 
of  the  two  columns  should  be  equal.  If  they  are,  the  test  is  complete  and  you  have  taken 
what  is  called  in  bookkeeping  a  "  trial  balance."  Compare  the  totals  of  your  trial 
balance  with  the  totals  of  your  journal. 

Have  your  work  approved,  then  copy  this  trial  balance  into  the  journal,  and  the 
accounts  into  the  ledger,  using  the  first  blank  pages.  A  correct  trial  balance  follows, 
with  the  proper  heading  : 


TRANSFERRING    ENTRIES    FROM   JOURNAL   TO    LEDGER 


cyit^(^€  '^-^O'/c^'Ti.ce^  {//it^^^  c^y,  y^- 


45 


E.  L.  Coe 

2 

000 

Wheat 

1 

530 

88 

1 

672 

Corn 

1 

110 

75 

1 

202 

Oats 

305 

417 

50 

Barley 

341 

10 

428 

40 

Expense 

201 

75 

Cash 

5 

719 

90 

3 

489 

48 

9 

209 

38 

9 

209 

38 

QUESTIONS 

1.  Why  do  the  total  debits  equal  the  total  credits  in  the  trial  balance  ? 

2.  Why  do  the  totals  of  the  trial  balance  equal  the  totals  of  the  journal  ? 

3.  What  is  posting  ? 

4.  What  is  postmarking  ? 

5.  Why  is  postmarking  necessary  ? 


LESSON    XVI 

POSTING   THE   TRANSACTIONS   OF   LESSON   XI  — SET   II 

Required  of  the  Student.  —  1.  Open  the  following  accounts  in  your  ledger,  beginning 
on  the  first  unused  page  following  the  last  lesson.  The  figures  indicate  the  number  of 
spaces  to  leave  for  each  account.  E.  E.  Gaylord,  6 ;  Merchandise,  20 ;  Expense,  10 ; 
Fixtures,  6;  Cash,  18;   Bills  Payable,  8;   Bills  Receivable,  12;  and  Loss  and  Gain,  G. 

2.  Post  all  debit  items  to  their  respective  accounts  in  the  ledger.  Postmark  all 
entries. 

3.  Post  all  credit  items  to  their  respective  accounts  in  the  ledger.  Postmark  all 
entries. 

4.  Add  both  sides  of  accounts  and  enter  totals  in  pencil  footings. 

5.  Take  a  trial  balance.     Test  your  results  with  the  following : 

The  cash  balance  is  $  949.10 

The  bills  payable  balance  is  549.70 

The  bills  receivable  balance  is  648.83 

6.  Have  work  approved  and  copy  in  your  blank  book,  following  the  trial  balance  for 
Set  I. 

QUESTIONS 

1.  If  the  ledger  headings  were  not  given,  how  could  you  tell  how  many  were 
required  ? 

2.  Can  you  think  of  any  mistakes  that  might  be  made  in  posting  that  would  not  be 
discovered  by  means  of  the  trial  balance .-' 

3.  Have  you  postmarked  all  items  in  the  journal  and  ledger  .-* 

4.  What  are  two  purposes  of  postmarking  ? 

5.  Compare  the  totals  of  your  trial  balance  with  the  totals  of  the  journal. 

6.  Why  should  postmarkings  be  entered  at  the  time  of  posting.'' 


46 


LESSON    XVII 
POSTING    THE   TRANSACTIONS    OF    LESSON    XIV  — SET    III 

1.  Open  the  following  accounts  in  your  ledger,  beginning  with  the  first  unused 
page:  J).  C.  Meyer,  (! ;  E.  E.  Anderson,  6;  Merchandise,  16;  Real  Estate,  7;  Fix- 
tures, 5 ;  Expense,  9 ;  Interest,  6 ;  Cash,  18  ;  Bills  Receivable,  G ;  Bills  Payable,  6 ; 
9  personal  accounts,  one  fourth  of  a  page  each  ;  and  Loss  and  Gain,  8. 

2.  Post  all  debit  items.     Be  sure  you  are  entering  the  pages,  i.e.  postmarking. 

3.  Post  all  credit  items,  paying  careful  attention  to  postmarking. 

4.  Rule  up  all  accounts  that  balance,  that  is,  all  in  which  the  debits  and  credits  are 
equal  in  amount. 

5.  Take  a  trial  balance.     Test  your  results  with  the  following  : 

The  cash  balance  is  $  1048.16 

The  bills  payable  balance  is  1000. 

The  total  of  accounts  payable  is  1471.50 

The  total  of  accounts  receivable  is  507.65 

6.  Have  your  work  approved  and  copy  in  your  blank  book. 

QUESTIONS 

1.  Why  do  the  total  debits  equal  the  total  credits .''     (Journal  or  trial  balance.) 

2.  The  ninth  journal  entry  is  expense  debit  $  36,  cash  credit  $  36. 

{a)  Would  your  trial  balance  be  affected  if  you  had  omitted  this  transaction  from 
your  ledger  .-*     How  about  the  totals  .-* 

{b)  How  would  it  be  affected  if  you  had  posted  each  item  of  this  transaction  twice  .-' 

{c)  How  would  the  trial  balance  be  affected  if  you  had  omitted  the  debit  item  only } 

{d)   How  if  you  had  omitted  the  credit  item  only  } 

{e)  If  your  journal  entry  had  been  made  cash  debit  $  36  and  expense  credit  $  36, 
would  this  have  affected  the  totals  of  the  trial  balance .-' 

3.  How  do  the  totals  of  the  trial  balance  compare  with  the  journal  totals  "i     Why 
do  they  not  agree  .-' 

4.  Compare  the  totals  of  the  trial  balance  with  the  totals  of  the  day  book. 

5.  Compare  journal  totals  and  the  day  book  total.     (They  should  agree.     Why.?) 

6.  What  effect  will  it  have  on  your  trial  balance  if  you  make  a  mistake  in  figuring 
one  of  the  sales  .-" 

7.  Explain  No.  6  fully. 

8.  Make  several  tests  involving  No.  6. 

9.  Why  is  it  not  necessary  to  include  Brewer's  account  (p.  40)  in  the  trial  balance .'' 

10.  How  many  accounts  were  not  included  in  the  trial  balance  "? 

11.  If  the  debit  and  credit  totals  of  these  accounts  were  added  to  the  totals  of  the 
trial  balance,  how  would  the  results  agree  with  the  totals  of  the  journal.? 

12.  What  does  a  trial  balance  show  } 

47 


LESSON    XVIII 

ANALYSIS   OF   ACCOUNTS   AND   CLOSING   THE   LEDGER 

Introduction.  —  The  merchant  desires  to  know  at  various  times  what  results  his 
business  is  producing  ;  that  is,  whether  he  is  gaining  or  losing,  how  much  his  business 
is  worth,  etc.  This  information  is  generally  obtained  by  a  process  known  in  book- 
keeping as  closing  the  ledger.  It  has  already  been  shown  that  some  accounts  show 
balances,  and  that  the  differences  between  the  sides  of  other  accounts  show  losses 
or  gains.  The  classification  of  accounts  is  based  upon  the  meaning  of  the  difference 
between  the  two  sides. 

CLASSIFICATION   OF  ACCOUNTS 


Personal      i 


Accounts 


f  Debtors 
Creditors 

I  Financial 
Impersonal]  [Business  or  Trading 

[  Nominal 


Personal  accounts  include  all  those  kept  with  individuals  or  firms.  The  explanation 
of  the  closing  entry  is  "  Balance."  The  balance  shows  an  amount  due  to  the  firm  or 
from  the  firm. 

All  other  accounts  are  impersonal,  and  are  either  real  or  nominal.  A  real  account 
is  one  in  which  the  debit  and  the  credit  items  relate  to  tangible  things ;  c.^-.  when  cash 
is  debited  or  credited,  a  commodity  called  cash  is  received  or  paid  out,  likewise  with 
merchandise,  real  estate,  bills  receivable,  etc.  Real  accounts  must  be  considered  from 
two  standpoints :  First,  those  real  accounts  in  which  the  difference  between  the  two 
sides  is  a  balance;  e.£^.  cash,  bills  receivable,  etc. — these  are  known  as  financial 
accounts.  Second,  those  real  accounts  from  which  profits  are  naturally  expected, 
although  they  may  show  losses  ;  e.^:  merchandise,  real  estate,  etc. 

The  financial  accounts  close  by  using  the  explanation  "  Balance  "  ;  however,  these 
accounts  under  abnormal  conditions  may  show  a  loss  to  the  business. 

The  business  accounts  close  by  using  the  explanation  "  Loss  and  Gain,"  but  before 
the  true  condition  can  be  ascertained,  it  is  necessary  to  consider  the  value  of  any 
unsold  goods. 

A  nominal  account  is  an  account  in  name  only,  no  tangible  thing  being  received 
when  such  an  account  is  debited,  and  none  given  out  when  it  is  credited  ;  i\g:  interest 
is  debited  not  because  received  but  because  it  costs  value  —  no  commodity  known  as 
interest  exists.  Nominal  accounts  are  necessary  to  complete  the  scheme  of  a  debit 
for  every  credit.  These  accounts  close  to  "Loss  and  Gain"  and  the  results  maybe 
affected  by  inventories. 

48 


ANALYSIS    OF   ACCOUNTS   AND    CLOSING   THE    LEDGER  49 

GENERAL   ORDER   OF   CLOSING 

1.  Close  personal  accounts  to  "  Balance." 

2.  Real  Accounts : 

(a)  Close  to  "  Balance  "  cash,  bills  receivable,  etc. 

(d)  Close  to  "  Loss  and  Gain,"  merchandise,  expense,  real  estate,  etc.,  after  recording 
inventories. 

3.  Close  nominal  accounts  to  "  Loss  and  Gain." 

4.  Close  loss  and  gain  account  to  the  proprietor's  account. 

5.  Close  the  proprietor's  account  to  "  Balance." 

6.  Take  a  second  trial  balance. 


LESSON    XIX 

CLOSING   LEDGER   OF    SET   I 

Required  of  the  Student. — 1.  Open  an  account  with  "Loss  and  Gain,"  if  it  is  not 
already  opened. 

2.  Close  cash  account  to  "  Balance,"  rule  up  the  account,  and  bring  down  the  balance. 

3.  Close  the  following  accounts  to  *'  Loss  and  Gain"  :  Wheat,  Corn,  Oats,  Barley, 
and  Expense. 

The  difference  in  each  of  the  first  four  accounts  shows  a  gain  or  a  loss,  and  this 
difference  is  to  be  carried  to  the  opposite  side  of  the  loss  and  gain  account  (see  form, 
Lesson  IX).     Enter  pages  in  each  account,  showing  the  transfer. 

Expense  account  shows  a  loss,  and  the  difference  is  carried  to  the  debit  side  of  the 
loss  and  gain  account. 

4.  Close  the  loss  and  gain  account  (see  form.  Lesson  IX)  by  writing  the  proprietor's 
name  on  the  debit  side  and  carrying  this  difference  to  the  credit  side  of  the  proprietor's 
account. 

5.  Close  the  proprietor's  account  to  "  Balance,"  rule  up  the  account,  and  bring  down 
the  balance. 

You  will  find  in  this  set  but  two  balances  brought  down  —  one  credit  and  one  debit. 
The  debit  must  equal  the  credit.  Compare  these  amounts.  If  they  are  not  equal,  you 
have  made  a  mistake  somewhere  in  closing. 

In  more  extensive  sets  many  debit  and  credit  balances  will  be  found  whenever  the 
ledger  is  closed,  but  this  rule  always  holds  good  :  The  total  of  the  several  debit  balances 
must  equal  the  total  of  the  several  credit  balances.  Making  this  test  is  called  taking 
a  second  trial  balance,  and  it  should  always  be  made  as  soon  as  the  ledger  is  closed. 

The  debit  balances  are  known  as  assets  or  resources.  They  represent  properties 
belonging  to  the  firm  or  debts  due  the  firm  or  business. 

The  credit  balances  are  known  as  liabiHties  and  represent  debts  due  by  the  firm  or 
business. 

After  a  ledger  is  closed,  the  total  assets  must  equal  the  total  liabilities. 

QUESTIONS 

1.  What  is  meant  by  closing  an  account  ? 

2.  How  do  you  close  an  account  ? 

3.  What  is  the  per  cent  of  gain  or  loss  on  wheat  ?     On  barley  .''     On  oats  .'* 

4.  What  is  the  per  cent  of  gain  on  the  investment  made  by  the  proprietor.? 

5.  The  expenses  are  what  per  cent  of  the  purchases  ?     Of  the  sales .-' 

6.  Name  the  nominal  accounts  in  this  set. 

7.  Name  the  real  accounts  of  the  first  class.     Of  the  second  class. 

8.  Why  must  the  total  debits  equal  the  total  credits  after  a  ledger  is  closed } 

9.  How  is  the  equality  of  debits  and  credits  in  the  ledger  preserved  when  the 
closing  entry  is  "Balance  "  ?     "  Loss  and  Gain  "  .-* 

60 


LESSON    XX 

CLOSING    LEDGER    OF    SET    II 

Closing  the  ledger  of  Set  II  differs  from  that  of  Set  I  in  one  particular  :  not  all  the 
merchandise  bought  during  the  month  has  been  sold.  This  must  be  considered  in  deter- 
mining the  losses  and  gains  for  the  month.  The  present  value  of  the  safe  charged  to 
fixtures  must  also  be  considered. 

ORDER  OF   CLOSING 

1.  Close  to  "  Balance  "  cash  and  bills  payable.  Rule  up  these  accounts  and  bring 
down  the  balances. 

Credit  each  of  the  following  accounts  with  inventories  : 
Fixtures  $58.     Mdse.  ;^  1525.67. 

2.  Close  to  "Loss  and  Gain,"  expense,  fixtures,  and  merchandise,  carrying  the  loss  or 
gain  differences  to  the  opposite  side  of  the  loss  and  gain  account.  Enter  the  pages  in 
transferring  these  differences. 

3.  Close  the  loss  and  gain  account,  and  transfer  the  difference  to  the  proprietor's 
account. 

4.  Close  the  proprietor's  account,  rule  up  the  account,  and  bring  down  the  balance. 
Take  a  second  trial  balance.     Copy  the  second  trial  balance  in  the  journal.     Head 

it  "Second  Trial  Balance,  June  30,  19 — ." 

QUESTIONS 

1.  Classify  the  accounts  of  this  set. 

2.  What  is  the  gain  per  cent  on  merchandise  ? 

3.  The  expenses  are  w  hat  per  cent  of  the  sales  ? 

4.  What  per  cent  profit  has  the  proprietor  realized  on  his  investment .-' 


51 


LESSON    XXI 
CLOSING    LEDGER    OF    SET    III 

1.  Close  accounts  to  "  Balance." 

2.  Credit  inventories  shown  at  the  end  of  Set  III. 

3.  Close  accounts  to  "  Loss  and  Gain." 

4.  Close  loss  and  gain  and  proprietor's  account. 

5.  Take  a  second  trial  balance. 

QUESTIONS 

1.  Why  does  the  second  trial  balance  balance  ? 

2.  What  is  the  difference  between  the  first  and  second  trial  balances.? 

3.  If  in  closing  an  account  you  carry  down  the  balance  on  the  wrong  side,  how  will 
the  second  trial  balance  be  affected  ? 

4.  What  effect  would  it  have  on  your  final  results  if  you  should  omit  an  inventory  in 
closing  an  account  ? 

5.  Would  the  omission  in  Question  4  affect  equality  of  debits   and  credits  in  the 
second  trial  balance  ? 


52 


LESSON    XXII 
BALANCE   SHEET 

Introduction.  —  The  books  of  a  firm  are  usually  kept  in  the  office.  They  are  bulky 
and  not  at  all  times  accessible  to  the  proprietor.  As  a  consequence  a  condensed  state- 
ment of  the  ledger  is  usually  drawn  off  and  submitted  to  those  owning  the  business. 
This  statement,  in  whatever  form  it  may  appear,  is  known  as  a  "  balance  sheet." 
The  balance  sheet  should  show  the  assets  and  liabilities  of  the  business,  the 
present  worth  of  the  proprietor,  and,  in  detailed  or  condensed  form,  the  losses  and 
gains  of  the  business. 

The  listing  may  be  in  the  following  order : 

1.  The  itemized  assets  and  the  total. 

2.  The  itemized  liabilities  and  the  total. 

3.  The  present  worth  or  net  capital. 

4.  The  itemized  gains  and  the  total. 

5.  The  itemized  losses  and  the  total. 

6.  The  net  gain  or  net  loss. 

7.  The  net  investment  of  the  proprietor  with  net  gain  added  or  net  loss  deducted. 
Some  of  the  items  are  best  shown  in  totals ;  e.g.  accounts  receivable  and  accounts 

payable. 

The  balance  sheet  may  be  made  out  before  or  after  the  ledger  is  closed.  When  the 
balance  sheet  is  made  out  after  the  closing,  all  that  is  necessary  is  to  copy  the  balances 
brought  down  representing  the  assets  and  liabilities.  The  loss  and  gain  account  gives 
an  itemized  statement  of  the  losses  and  gains.  When  the  balance  sheet  is  made  out 
before  the  closing  of  the  ledger,  the  regular  steps  of  closing  a  ledger  must  be  followed 
in  order  to  secure  the  material  necessary  to  construct  the  balance  sheet.  It  is  easier  to 
make  out  the  balance  sheet  after  the  ledger  has  been  closed  ;  but,  owing  to  errors  that 
may  be  made  in  the  closing  of  the  ledger,  it  is  safer  to  make  out  the  balance  sheet 
first.  The  student  should  experience  no  difficulty  in  following  either  procedure. 
In  this  text  the  sets  are  closed  before  the  balance  sheet  is  made  out,  but  the 
method  is  reversed  in  all  exercises  for  making  balance  sheets  from  trial  balances, 
thus  making  use  of  both  methods. 

The  following  is  a  trial  balance  of  a  ledger,  with  a  complete  balance  sheet  given  as 
a  model  form  : 

53 


64 


BOOKKEEPING 

Trial  Balance,  Jan. 

31, 

19— 

E.  P.  Drummond, 

Prop. 

$190. 

Cash 

4042.69 

Mdse. 

(Inventory  ^4500) 

8760. 

Expense 

(Inventory       200) 

642.60 

Office  Fixtures 

(Inventory       150) 

187.50 

Bills  Rec. 

780. 

Bills  Pay. 

540. 

H.  VV.  Ford  &  Co. 

1045. 

F.  W.  French 

198.13 

K.  W.  Freyding 

72.60 

Michael,  Tabbot  &  Co. 


$6220. 
3358.50 
5085.40 
24.70 

230. 

1040. 

745. 

75.61 

487.20 

92.11 


$17358.52 


$17358.52 


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Required  of  the  Student.  —  Make  out  balance  sheets  conforming  to  such  of  the  fol- 
lowing trial  balances  as  your  teacher  may  direct  and  have  them  approved.  Copy  them 
in  your  journal,  but  do  not  have  part  of  a  balance  sheet  on  one  page  and  part  on  another. 


BALANCE    SHEET 


65 


/.    Trial  Balance,  Jan. 


Pupil,  Prop. 

Cash 

Mdse. 

Fixtures 

Expense 

Freight  and  Expressage 

Advertising 

William  Kennedy 

Elmer  Foster 

H.  H.  Snow 

L.  G.  Wilson 

Mercer  Johnson  &  Co. 


(Inventory  $600.  ) 
(Inventory  5o.  ) 
(Inventory       12,75) 


31,  19— 

$m. 

$500. 

1265.40 

993.90 

1544.::50 

1369.80 

62.50 

86.40 

3.20 

18.75 

26.50 

43.20 

13.20 

100. 

212.90 

9.60 

22.95 

10. 

163.40 

300. 

$3403. 


$  3403. 


Frank  Marshall,  Prop. 

Mdse. 

Expense 

Wages 

Postage 

Bills  Pay. 

Central  Supply  Co. 

Cash 


//.    Trial  Balance,  Feb.  28,  19— 


(Inventory  $5000.     ) 
(Inventory  65.     ) 

(Inventory         61.50) 


$225. 

$8000. 

10678.90 

9286.74 

592.61 

1645. 

365. 

100. 

3100, 

564.30 

1364.30 

15489.76 

7909.53 

$29660.57 


$29660.57 


///.    Trial  Balance,  Mar.  31,  19— 


Pupil,  Prop. 

$4000. 

Cash 

$6783.66 

6289.03 

Bills  Rec. 

1500. 

500. 

Bills  Pay. 

660. 

1660. 

Mdse. 

(Inventory  $3000.     ) 

9687.36 

7938.67 

Fixtures 

(Inventory       165.     ) 

185.50 

Expense 

(Inventory         16.80) 

293.15 

4.30 

Horses  and  Wagons 

(Inventory    1200.     ) 

1645. 

500. 

John  Rupert 

765. 

265. 

Raymond  Sharpless 

92.13 

50. 

Herbert  Johnson 

1000. 

1316.20 

Reynolds,  Case  &  Co. 

88.60 

$22611.80 

$22611.80 

56 


BOOKKEEPING 


Irene  Hall,  Prop. 

Cash 

Mdse. 

Expense 

Insurance 

Freight  and  Cartage 

Horse  and  Wagon 

Light  and  Fuel 

Office  Fixtures 

Shipt.  J.  Carter  &  Co. 

F.  E.  Peters 

S.  M.  Sloan 

D.  J.  Moore  &  Co. 

E.  B.  Ramoser 
Geo.  Hartman 
Dena  Schlaes 
Hattie  Klitzke 
Florence  Coaleur 
J.  P.  Shaw 

I.  Hall  &  Co. 

M.  E.  Kane  &  Co. 

Wm.  Phillips 

Wisconsin  Produce  Co. 

J.  Coulter 

C.  Meschter 


IV.    Trial  Balance,  Apr.  30,  19— 


J.  P.  Barker,  Prop. 

E.  M.  Mearns,  Prop. 

Mdse. 

Expense 

Cash  Discount 

Interest  and  Discount 

Wages 

Traveling  Expenses 

Shipments 

Bills  Rec. 

Bills  Pay. 

Accounts  Rec. 

Accounts  Pay. 

Cash 


(Inventory  $4100.     ) 

(Inventory  12.50) 

(Inventory  21.75) 

(Inventory  237.50) 

(Inventory  20.     ) 

(Inventory  52.     ) 

(Inventory  946.45) 


5932.46 
72.50 
23.50 
75.00 

250. 
82.50 
57.25 

966.45 
90. 

140. 
99. 

116.40 

841.80 
70.01 

173. 
63.13 
49.64 


$9867.19 


V.    Trial  Balance,  May  31,  19 — 


(Inventory  $  6000) 
(Inventory       250) 


(Inventory  $  2000) 


$9678.20 
965.30 
165.10 
6.50 
127.50 
45. 
3162.50 
720.00 
600. 
4000. 

392. 

$19862.10 


$5986.59 
2329.79 


958.40 

250. 

182.65 

123.61 
18.90 
17.25 


$9867.19 


$3500. 
3750. 
5869.20 
200. 
74.18 
8.72 


1960. 

500. 

1000. 


3000. 


$19862.10 


BALANCE   SHEET 


67 


F/.    Trial  Balance,  June  30,  ig — 


John  Smith,  Prop. 

^400. 

$15500. 

Cash 

3746.75 

Bills  Rec. 

800. 

Bills  Pay. 

5000. 

Mdse. 

(Inventory  ^15675) 

26350. 

192.50. 

Real  Estate 

(Inventory     10750) 

11000. 

500. 

Good  Will 

(Inventory         800) 

1000. 

General  Expense 

965.75 

Wages 

3420. 

Fixtures 

(Inventory         425) 

460. 

Light  and  Fuel 

(Inventory         175) 

420. 

Cash  Discount 

212.50 

C.  L.  Meade 

200. 

R.  M.  Barker 

300. 

J.  Evans  &  Co. 

3000. 

G.  M.  PhilHps 

5000. 

^48762.50 

$48762.50 

LESSON    XXIII 

Required  of  the  Student.  —  Write  up  a  balance  sheet  for  each  of  the  Sets  I,  II,  and 
III.     Have  them  approved  and  then  copy  in  the  journal. 


LESSON    XXIV 


PART    FIRST  —  ACCOUNT   WITH    CASH    DISCOUNT 

Introduction.  —  The  time  and  manner  of  paying  for  merchandise  are  stated  on  the  bill, 
or  invoice,  unless  the  buyer  and  seller  have  a  previous  understanding  how  and  when  pay- 
ment is  to  be  made.  The  terms  of  the  bill  mean  the  conditions  of  payment.  The 
terms  may  be  cash,  which  means  immediate  payment;  if  the  terms  are  "account"  or 
"  on  account,"  the  exact  time  is  not  stated.  Frequently  a  choice  of  two  or  more  con- 
ditions is  given  the  purchaser.  In  such  cases  an  inducement  is  held  out  for  immediate 
or  early  payment.  Thus,  "cash  3  per  cent,  10  days  2  per  cent,  30  days  net,"  gives  a 
choice  of  three  conditions.  If  payment  is  delayed  beyond  10  days,  the  full  amount 
must  be  paid;  if  paid  within  10  days,  2  per  cent  is  deducted;  and  for  immediate  pay- 
ment, 3  per  cent  is  taken  off.  The  bill  must  be  paid  in  30  days.  Observe  that  the 
selling  price  is  the  same  in  the  three  cases.  Such  deductions  for  payment  within  a 
specified  time  are  cash  discounts.  The  title  "merchandise  discount"  is  frequently  used 
for  this  account. 


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Three  transactions  are  written  up  in  the  accompanying  form.     Enter  the  rest. 

Example  1.  — June  1,  19 — ,  paid  bill  due  Brown  &  Co.  $  750,  less  a  cash  discount  of 
2%  $15;  June  5  paid  Field  &  Co.  for  bill  due  to-day  $370,  less  3%  cash  discount 
$11.10;  June  7  received  cash  from  James  King  for  bill  of  $824,  less  1  %  $8.24;  June 
9  bought  of  Field  &  Co.  mdse.  $  842,  terms  2  %  10  days,  30  days  net,  paid  on  June  19 
less  discount ;  June  10  sold  James  Brown  &  Co.  mdse.  $  360,  terms  4  %  5  days,  20 
days  net,  paid  on  June  15  less  discount;  June  20  paid  cash  for  bill  of  mdse.  $246,  less 
1  "^0  for  payment  within  10  days.     Close  the  account  as  of  June  30,  19 — . 

PART    SECOND  — TRADE   DISCOUNT 

Introduction.  —  In  certain  lines  of  merchandise  the  prices  are  subject  to  frequent 
changes.  Catalogues  may  be  sent  out  at  long  intervals,  the  prices  therein  being  higher 
than  the  actual  selling  price.  To  the  purchaser  a  reduction  is  given  which  may  increase 
in  proportion  to  the  amount  of  the  bill.     This  discount  is  known  as  "trade  discount." 

The  discount  is  announced  from  time  to  time  to  all  customers  by  sending  out  a  dis- 
count sheet.  The  large  and  expensive  catalogue  may  not  be  changed  for  years. 
Sometimes  a  series  of  discounts  is  allowed:  as,  25,  20,  and  10%.  These  discounts 
are  successively  deducted.  They  are  never  added  together  and  then  deducted  at  one 
operation.  Trade  discount  is  always  deducted  at  the  time  the  bill  is  made  out.  It  has 
no  reference  to  the  time  of  payment  of  the  bill. 

68 


DISCOUNT  59 

Example  1.  —  A  sells  B  a  bill  of  goods  amounting  to  $360,  subject  to  the  following 
discount  series:  25,  20,  and  10%. 

25  %  of  100  %  of  the  face  of  the  bill  equals  25  %  of  the  face  of  the  bill,  1  st  discount. 

100  %  -  25  %  of  the  face  of  the  bill  equals  75  %  of  the  face  of  the  bill,  1st  net. 

20  %  of  75  %  of  the  face  of  the  bill  equals  15  %  of  the  face  of  the  bill,  2d  discount. 

75  %  -  15  %  of  the  face  of  the  bill  equals  60  %  of  the  face  of  the  bill,  2d  net. 

10  %  of  60  </c  of  the  face  of  the  bill  equals  6  %  of  the  face  of  the  bill,  3d  discount. 

60  %  -  6  %  of  the  face  of  the  bill  equals  54  %  of  the  face  of  the  bill,  3d  net  of  bill. 

%  360  X  .54  is  $194.40,  net  of  bill. 

$360  -  194.40  is  $165.60,  discount  on  bill. 

or 
100  %  100  %  100  % 

25%  _20%  10% 

75  %       X       80%       X       90  %  is  54  %,  net  of  bill. 

Required  of  the  Student.  —  Find  the  net  of  the  following  bills 

Example  2.  —  Gross  amount  of  bill,  $450;  discounts  33^  and  20  %. 

Example  8.  —  Gross  amount  of  bill,  $244.90;  discounts  10,  10  and  10  %  (or  3-10's). 

Example  4.  —  Gross  amount  of  bill,  $720;  discounts  62i,  20,  10,  5  and  21%. 

Example  5.  —  Sold  a  bill  of  mdse.  amounting  to  $64.75  less  5,  5  and  10%. 

Example  6.  —  Bought  the  following  goods  : 

1  Safe  $120  less  121  and  20  %  discount. 

1  Desk  $80  less  331  and  50%  discount. 

1  Chair  $  16.50  less  20  and  40  %  discount. 


LESSON  XXV 


THE   USE   OF   THE   CASH   BOOK 


Introduction.  —  A  knowledge  of  the  condition  of  the  cash  account  is  very  desirable 
to  the  business  man.  This  is  the  account  that  finally  records  the  receipt  for  all  sales 
and  the  payments  of  all  expenditures  in  the  ordinary  business  establishment. 

The  business  man  refers  to  this  account  more  often  than  to  any  other.  In  view  of 
this  it  has  become  customary  to  keep  a  special  book  for  the  record  of  receipts  and  pay- 
ments of  cash  ;  it  is  known  as  a  cash  book.  If  the  form  that  is  written  up  in  this  lesson 
be  compared  with  the  cash  accounts  in  the  ledger,  there  will  be  found  a  great  similarity  ; 
in  fact  the  only  difference  is  that  full  explanations  are  made  in  the  cash  book  and  these 
are  not  always  used  in  the  cash  account  as  found  in  the  ledger. 

The  entries  representing  the  receipts  and  payments  are  entered  at  the  time  the  trans- 
actions occur ;  this  enables  the  balance  of  cash  on  hand  to  be  determined  at  any  time. 


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The  accompanying  form  contains  the  records  of  cash  received  and  paid  out  in  the 
transactions  following. 

The  cash  book  as  commonly  used  requires  two  pages  facing  each  other,  one  for 
the  receipts  and  one  for  the  payments.  As  in  other  bookkeeping  forms,  the  left  and  the 
right  sides  are  respectively  the  debit  and  credit  positions.  An  entry  on  the  left  page 
of  a  cash  book  therefore  denotes  a  receipt,  or  that  cash  is  debited.  An  entry  on  the 
right  page  similarly  indicates  a  payment  or  that  cash  is  credited. 

Required  of  the  Student.  —  Journalize  the  transactions  that  are  recorded  in  cash  book 
form.  Compare  the  cash  book  entry  of  each  transaction  with  its  journal  entry.  Notice 
with  care  the  following  facts  about  the  cash  book  entry  of  each  transaction  :  on  which 
page  of  the  book  the  entry  is  made ;  where  the  name  of  the  account  that  you  have  on 
the  opposite  side  of  the  journal  entry  is  placed ;  what  part  of  the  page  the  explanation 
occupies ;  and  in  which  amount  column  the  entry  is  made.  Now  enter  the  transactions 
you  journalized  in  cash  book  form,  referring  to  model  only  when  necessary.     Copy  the 

GO 


THE   USE   OF   THE   CASH    BOOK 


61 


journal  and  cash  book  forms  into  the  exercise  book  after  they  have  been  approved. 
Use  the  first  two  unused  pages  facing  each  other  for  the  cash  book. 

Jan.  1,  19—,  Martin  Peterson  commenced  business  with  a  cash  capital  of  $1500; 
Jan.  2  paid  cash  for  rent  of  store,  one  month,  $  o5 ;  Jan.  8  paid  W.  W.  Coffin  cash  in 
full  of  account  $21.37;  Jan.  1  received  cash  on  account  from  W.  J.  Fisher  $124.36; 
Jan.  5  Wm.  Kaiser  paid  cash  for  his  note  and  interest  on  it  up  to  the  r)th  of  last  month, 
face  of  the  note  $  200,  interest  $  2.35  ;  Jan.  6  paid  cash  for  my  note  now  due  favor  A.  B. 
Smith  and  interest  on  it,  face  of  the  note  $  175,  interest  $  3.24 ;  Jan.  9  paid  cash  for 
cleaning  storeroom  $  3.25 ;  Jan.  10  W.  J.  Fisher  paid  cash  for  balance  $  75.14 ;  Jan. 
11  A.  A.  Brewer  paid  cash  for  his  note  less  discount  for  30  days,  face  of  the  note  $175, 
discount  $  1.75  ;  Jan.  15  paid  my  note  favor  Geo.  Brown  less  discount,  face  of  note 
$300,  discount  $1.50. 

Trace  these  transactions  through  the  accompanying  form  known  as  a  cash  book. 


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QUESTIONS 

1.  Point  out  the  differences  between  the  cash  book  form  as  given  and  the  cash 
account  as  found  in  the  ledger. 

2.  Explain  the  use  of  the  several  columns. 

3.  How  often  may  the  cash  book  be  closed } 

4.  Why  is  the  balance  that  is  brought  down  entered  in  the  second  column  } 

5.  Explain  the  reason  for  the  transaction  of  the  11th  being  entered  in  part  on  each  side. 

6.  Also  the  reason  for  the  entry  of  Jan.  15. 

7.  How  much  was  actually  received  on  the  11th  } 

8.  Why  not  make  an  entry  of  the  actual  amount  received  .-* 

9.  Apply  questions  in  reverse  to  the  15th. 

10.  What  effect  will  it  have  on  the  receipts  and  payments  to  increase  each  side 
equally  .■'     What  effect  on  the  balance  ? 

11.  How  would  the  left-hand  side  of  the  cash  book  appear  if  put  in  one  journal 
entry  .''     Make  the  entry. 


62 


BOOKKEEPING 


12.  How  would  the  right-hand  side  a[)pear  ?     Make  the  entry. 

13.  Make  one  journal  entry  showing  all  the  debits  and  credits  of  the  cash  book. 

14.  Which  would  require  the  more  labor,  to  post  the  journal  entries  made  in  Ques- 
tions 11  and  12  or  those  resulting  from  journalizing  each  transaction.? 

15.  Could  you  post  the  items  directly  from  the  cash  book  .-' 
IG.    What  advantages  are  there  in  using  the  cash  book  ? 

THE    BILL   BOOKS 

When  the  character  of  a  business  is  such  that  a  considerable  number  of  notes  are 
received  and  issued,  it  is  desirable  to  provide  some  special  arrangement  for  recording 
them.  Unless  the  number  is  large  the  bill  book  meets  all  requirements  satisfactorily. 
Because  of  the  classification  of  notes,  as  previously  explained,  the  bill  book  generally 
consists  of  two  parts  —  the  bills  receivable  and  the  bills  payable.  They  may  be  bound 
together  or  separately  according  to  the  demands  of  the  business.  It  may  happen  that  a 
business  receives  a  large  number  of  other  parties'  notes  while  but  few,  if  any,  are  issued  ; 
or  the  reverse  may  be  true. 

These  books  may  be  used  merely  for  reference,  and  are  then  auxiliary  to  some 
other  book  —  as  the  journal,  in  which  debits  and  credits  arising  from  transactions  in- 
volving notes  are  recorded  ;  or  they  may  be  used  as  principal  books  and  contain  the 
only  records  of  notes,  excepting  the  ledger  accounts.  For  the  transactions  of  August 
and  September  following,  they  are  treated  as  auxiliary  to  the  journal. 


Datf. 
Recorded 

No. 

Drawee  or  Maker 

Ix  Whose  Favor 

For  What   Received 
(Ledger  Account) 

Where  Payable 

i.9— 
/u/y 

a 
a 

11 
12 
16 

W.  W.  Mason 
Foberg  6^  Stacey 
W.  IV.  Mason 

Ourselves 
Ourselves 
Ourselves 

W.  W.  Mason 
Foberg  <5r=  Stacey 
W.  W.  Mason 

Date 
Recorded 

No. 

Drawee  or  Maker 

In  Whose  Fanor 

For  What  Given 

(Ledger  Account) 

Where  Payable 

IB- 
July 

13 

1 

Ourselves 

Jevne  ^  Co. 

Jevne  6-  Co. 

THE    BILL    BOOKS 


63 


THE    BILLS    RECEIVABLE    BOOK 

This  contains  a  record  of  all  promises  to  pay  made  by  others  and  received  by  the 
business.  Special  spaces  are  provided  for  recording  all  important  information  in  con- 
nection with  a  bill  receivable  from  the  time  it  comes  into  the  possession  of  the  business 

until  it  is  disposed  of. 

THE    BILLS    PAYABLE    BOOK 

This  contains  a  record  of  all  promises  to  pay  issued  by  the  business.  It  is 
similar  in  form  to  the  bills  receivable  book.  The  difference  between  them  will  be 
best  understood  by  a  comparison  of  the  headings  of  the  pages. 

The  entries  in  the  two  books  following  are  the  notes  receivable  and  payable  of 
Set  III.  Compare  with  the  ledger  accounts  of  that  set.  The  ruling  and  totaling  are 
not  necessary,  but  are  given  for  comparative  purposes,  and  to  show  how  such  books 
are  ruled  if  posting  is  made  from  them. 

QUESTIONS 

1.  With  what  amount  in  the  ledger  must  the  total  of  the  bills  receivable  book 
agree  ? 

2.  The  total  of  the  bills  payable  book.-* 

3.  The  total  of  those  disposed  of  in  the  bills  receivable  book.-* 

4.  The  total  of  those  not  disposed  of  ? 

5.  The  total  of  those  redeemed  in  the  bills  payable  book.? 


cc-ei-ii-^z 


Date 

Time 

When  Due 

Rate 

OF 

Int. 

When  and  How 

Year 

Month 

Day 

Year 

I 

2 

3 

4 

S 

6 

7 

8 

9 

lO 

II 

12 

Disposed  of 

19— 
19— 

19— 

July 

u 
ii 

11 
12 
16 

10  da. 
10  da. 
10  da. 

19— 
19— 

19— 

21 

22 
26 

203 
100 

220 

6% 
6% 
6% 

Pd.  July  22,  19— 
Pd.  July  22, 19— 
Pd.  July  26, 19— 

523 
-e — 

Total  notes  rec'd 

iJi^^/tZ't^/e' 


Date 

Time 

When  Due 

Rate 

I.NT 

When  and  How- 

Year 

Month 

Day 

Year 

1 

2 

3 

4 

5 

6 

7 

8 

9 

lO 

II 

12 

Redeemed 

19— 

July 

13 

20  da. 

2 

1000 

6% 

1000 

Total  notes  issued 

64  BOOKKEEPING 

6.  The  total  of  those  not  redeemed  ? 

7.  How  can  you  find  the  due  date  of  a  note  from  the  bill  book? 

8.  From  the  journal  or  day  book  entry  ? 

0.    How  can  you  find  from  the  bill  books  all  the  notes  falling  due  at  a  certain  time? 
How  would  you  get  the  same  information  from  the  journal  or  day  book  entries  ? 

10.  How  can  you  determine  from  the  bill  books  whether  a  particular  note  has  been 
paid  or  redeemed?     How  would  you  get  this  information  from  the  other  books? 

THE    SALES    BOOK 

Since  the  sales  of  merchandise  constitute  a  large  proportion  of  the  transactions  in 
any  regular  mercantile  establishment,  it  is  customary  to  provide  a  separate  book  in 
which  to  record  these  transactions.  The  sales  book,  or  sales  register,  as  this  book  is 
frequently  called,  should  contain  an  itemized  record  of  all  sales  of  merchandise  except 
such  as  are  made  for  cash  to  parties  with  whom  no  accounts  are  opened.  We  shall 
designate  these  as  petty  cash  sales.  In  general  each  sales  book  record  should  contain, 
besides  an  itemized  list  of  the  goods  with  their  prices,  the  name  of  the  purchaser,  his 
address,  the  terms  of  the  sale,  and  such  additional  information  as  may  be  required  in 
reference  to  the  transaction. 

THE  USE  OF  THE  EXPLANATION  COLUMNS  OF  THE  LEDGER 

The  wide  spaces  of  the  ledger  are  always  used  for  the  purpose  of  explaining  clos- 
ing entries.  Except  in  personal  accounts  this  part  of  the  page  is  not  generally  used 
for  any  other  purpose.  The  exact  explanation  used  in  any  case  depends  upon  the 
nature  of  the  item  and  the  requirements  of  the  particular  business. 


LESSON    XXVI 
FURNITURE    BUSINESS  — SET    IV 

Introduction. — The  books  of  record  used  in  this  set  are  the  Day-book  Journal,  Cash 
Book,  Sales  Book,  Bill  Book,  and  Ledger. 

The  day-book  journal  contains  as  a  complete  record,  first,  the  journal  entry  —  that 
is,  the  debit  and  credit  items ;  and,  second,  an  explanation  sufficiently  complete  to  con- 
tain all  the  essential  details  of  the  transaction  that  have  made  the  debits  and  credits  of 
the  journal  entry  necessary.     See  model  form  in  this  lesson. 

The  ledger  is  of  the  same  form  as  in  previous  exercises,  except  that  the  explana- 
tion column  is  used  in  personal  accounts.     See  model  form  in  previous  lesson. 

The  routine  of  work  is  as  follows :  AH  receipts  and  expenditures  of  cash  are  re- 
corded in  the  cash  book.  All  sales  of  merchandise  are  recorded  in  the  sales  book, 
except  petty  cash  sales.  The  journal  contains  a  record  of  all  other  transactions.  The 
bill  book  contains  records  of  all  notes,  either  issued  or  received  by  us.  No  posting  is 
made  from  this  book;  it  is  called  "a  helper"  or  "an  auxiliary  book."  The  personal 
accounts  are  to  show  full  debit  and  credit  amounts  of  all  sales  and  purchases.  In  all 
transactions  the  buying  price  of  merchandise  is  given.  Refer  to  the  price  lists,  pages  68 
and  69,  for  the  selling  prices  of  merchandise  whenever  they  are  omitted  from  the  text. 

The  student  is  the  bookkeeper  and  receives  a  salary  of  $18  a  week.  Frank  An- 
drews is  a  salesman  and  receives  a  salary  of  $15  a  week.  Accounts  are  opened  with 
these  persons.  They  receive  credit  for  salaries,  and  are  charged  for  all  amounts  paid 
them.  Make  a  brief  memorandum  entry  of  their  engagement  in  the  day-book  journal, 
following  the  opening  entry. 

Required  of  the  Student.  — You  will  be  assigned  one  of  the  price  hsts  for  this  set. 
Do  not  change  price  lists  after  starting.  Figure  the  extensions  of  all  bills  for  the  month 
of  August,  then  write  up  the  transactions  in  the  day-book  journal,  the  sales  book,  the 
cash  book,  and  the  bill  book,  observing  the  forms  for  books  illustrated  in  Lesson 
XXV.  The  day-book  journal  is  shown  in  this  lesson.  Observe  the  instructions  fol- 
lowing each  of  the  first  ten  transactions. 

TRANSACTIONS 

Aug.  1,  19  — 

Daniel  G.  Cummings  this  day  began  a  wholesale  and  retail  furniture  business  at 
635  Main  Street.  His  investment  consisted  of  cash  $1060;  the  store  building  in 
which  the  business  will  be  conducted,  valued  at  $5000;  a  stock  of  mdse.  remaining 
from  a  former  business  $3280;  a  note  for  $500,  dated  to-day,  due  in  15  days,  interest 
at  5  %,  signed  by  Charles  Moore;  an  account  against  H.  VV.  Erving,  1638  Walnut  Street, 
for  $300;  an  account  against  Edward  Alleston,  1920  Central  Avenue,  $60. 

See  the  opening  entry  in  the  day-book  journal.  Enter  cash  on  the  debit  side  of 
the  cash  book,  and  record  the  note  in  the  bill  book. 

65 


6Q 


BOOKKEEPING 


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Aug.  2 

Paid  cash  for  a  set  of  blank  books  $37.50. 

Enter  in  the  cash  book  on  the  credit  side,  charge  to  "Expense." 

Paid  cash  for  office  safe  ;^180. 

Less  10  and  12.1  ^^  38.25 

$141.75 

Enter  the  net  amount  on  credit  side  of  cash  book,  charge  to  "  Fi.xture"  account. 
Placed  insurance  on  our  stock  of  goods  with  the  Home  Insurance  Company  $2000, 
premium  at  $12  per  thousand,  $24.     Enter  in  the  cash  book,  charge  to  "Insurance." 


FURNITURE   BUSINESS  67 

Aug.  3 

Received  goods  ordered  on  the  25th   ult.  from  Central  Furniture  Co.,  122  Front 
Street,  terms  2  %,  5  days,  as  follows  : 

(')  Oak  dining  room  tables  at  $  15  $  90. 

10  Mahogany  parlor  tables  at  $18.50  185. 

3  Oak  parlor  tables  at  $12.50  37.50 

24  Leather-seat  dining  chairs  at  $2.90  69.60 

36  Cane-seat  dining  chairs  at  $1.40  50.40 

6  Oak  sideboards  at  $18  108. 

$540.50 
Discounts  10  and  5  %  78.37 

$462.13 
See  entry  in  the  day-book  journal.     Why  is  it  not  necessary  to  itemize  the  purchase.'* 

Aug.  4 

Sold  for  cash  one  cane-seat  rocker  $2.50,  one  brass  bedstead  $xx.xx.       Total  $xx.xx. 

Enter  in  the  cash  book. 

Sold  Imperial  Hotel  Company,  Main  and  Market  Sts.,  on  account : 

12  Iron  bedsteads     at  $  x.xx  $  xx.xx 

12  Wool  mattresses  at     3.75  45. 

16  Cane-seat  chairs  at     2.10  33.60 

$  XXX. XX 

See  entry  in  sales  book  (p.  68). 

Sold  Wilson,  Demming  &  Co.,  624  Pine  St.,  on  account  5  days : 

3  Oak  dining  tables  at  $  25.  $  xx.xx 

2  Oak  office  chairs    at       6.80  13.60 

12  Leather-seat  dining  chairs  at  $3.50  xx.xx 

XXX. XX 

5  and  10  %  off  xx.xx 


$  XXX. XX 


See  entry  in  sales  book. 

Au^.  6 


Paid  cash  for  horse  and  wagon  for  delivering  goods  $  360.     Enter  in  cash  book. 
Charge  "  Horse  and  Wagon  "  account. 

Received  from  H.  W.  Erving  on  account  cash  $100. 

Received  from  Edward  Alleston  his  note  at  10  days,  in  settlement  of  account,  $  60, 
interest  6  %. 

Enter  in  day-book  journal  and  record  in  bill  book. 

Sold  H.  K.  Simpson,  1645  Walnut  St.,  on  account: 

1  Complete  dining  room  set  $  95. 

1  Brass  bedstead  xx.xx 

1  Hair  mattress  16.75 

$  XXX. XX 


68 


BOOKKEEPING 


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I 

2 

3 

4 

5 

6 

7 

8 

9 

lO 

II 

12 

Beds,  Folding 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

3250 

3250 

Beds,  Sofa 

2250 

2250 

2250 

2250 

2250 

20 

20 

20 

20 

20 

25 

25 

Bedsteads,  Brass  .... 

g250 

S250 

g250 

3250 

3250 

S250 

S250 

3250 

3250 

3250 

35 

35 

Bedsteads,  Iron      .... 

050 

Q50 

050 

050 

650 

6 

6 

6 

6 

6 

5 

5 

Bedsteads,  Oak      .... 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

18 

19 

Bookcases,  Combination 

35 

36 

37 

38 

39 

40 

30 

31 

32 

33 

34 

35 

Bookcases,  -Mahogany 

35 

35 

35 

35 

35 

35 

35 

35 

35 

35 

37 

37 

Bookcases,  Oak          .     .     . 

n 

25 

26 

27 

28 

24 

25 

26 

27 

28 

24 

25 

Cabinets,  Music     .... 

10 

10 

10 

10 

10 

10 

10 

10 

10 

10 

10 

10 

Cabinets,  Parlor    .... 

20 

22 

24 

26 

28 

30 

32 

34 

36 

38 

40 

38 

Chairs,  Cane-seat  Dining   . 

2^0 

2 

2S0 

2 

2^^o- 

2 

2^0 

2 

220 

2 

220 

2 

Chairs,  Leather-seat  Dining 

SS5 

SS5 

SS5 

gss 

S25 

SS5 

S25 

SS5 

S25 

S35 

S25 

SS5 

Chairs,  Office 

Q50 

Q50 

gso 

gso 

g5o 

10 

10 

10 

10 

10 

gso 

gso 

FURNITURE   BUSINESS 


69 


Aug.  7 
Bought  from  Central  Furniture  Co.  on  account,  bill  of  goods  amounting  to  $  312.60. 
Sold  H.  W.  Erving  on  account : 

3  Oak  writing  desks  at  $  8.60  $  25.80 

2  Oak  bookcases         "    24. 

2  Library  tables  "    20. 


XX. XX 
XX. XX 


5  and  5  % 


P  XXX. XX 

XX. XX 

$  XXX. XX 


Aug.  8 

Gave  Student,  bookkeeper,  and  Frank  Andrews,  salesman,  credit  for  week's  wages. 
Charge  "  Salary  "  account. 

Hired  Emil  Hauck  at  $  10  per  week  to  pack  and  deliver  goods. 

Paid  Central  Furniture  Co.  for  invoice  of  the  8d  $  462.18,  less  2  %  cash  discount. 

Review  Lesson  XXIV  for  cash  discount. 

When  a  bill  is  paid  on  which  a  cash  discount  is  allowed,  the  net  amount  will  be 
entered  in  the  cash  book  and  the  discount  allowance  will  be  entered  in  the  journal. 

The  payment  to  the  Central  Furniture  Co.  will  be  entered  in  the  cash  book  on  the 
credit  side  as  follows  : 


Aug.  8 


Central  Furniture  Co.    Inv.  of  3d  inst.  less  2  % 


452   89 


(Z^td-i^i^d^  tz-'^t^  ^2/c^^e^}9^■a'el 


13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

g2&o 

3250 

S250 

S250 

3250 

3250 

3250 

3250 

35 

35 

35 

35 

35 

35 

35 

35 

35 

35 

25 

25 

25 

25 

25 

25 

25 

25 

20 

20 

20 

20 

20 

2250 

2250 

2250 

2250 

2250 

35 

35 

35 

35 

35 

35 

35 

35 

30 

30 

30 

30 

30 

30 

30 

30 

30 

30 

5 

5 

5 

050 

Q50 

650 

650 

650 

6 

6 

6 

6 

6 

5 

5 

5 

5 

5 

20 

21 

22 

23 

H 

25 

26 

27 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

36 

37 

38 

39 

40 

30 

31 

32 

33 

S4 

35 

36 

37 

38 

39 

40 

30 

31 

37 

37 

37 

37 

37 

37 

37 

37 

33 

33 

33 

33 

33 

33 

33 

33 

33 

33 

26 

27 

28 

24 

25 

26 

27 

28 

24 

25 

26 

27 

28 

24 

25 

26 

27 

28 

10 

10 

10 

12 

12 

12 

12 

12 

12 

12 

12 

12 

12 

12 

12 

12 

12 

12 

36  ■ 

SJf 

32 

30 

28 

26 

24 

22 

20 

20 

22 

24 

26 

28 

30 

32 

34 

36 

2W 

2 

2^0 

2 

220 

2 

2S0 

2 

220 

2 

220 

2 

220 

2 

220 

2 

220 

2 

3^5 

S25 

g25 

325 

325 

325 

325 

325 

325 

325 

3-5 

325 

325 

325 

325 

325 

325 

325 

goo 

gso 

Q50 

10 

10 

10 

10 

10 

Q50 

Q50 

g5o 

gso 

gso 

10 

10 

10 

10 

10 

70 


BOOKKEEPING 


Enter  in  the  day-book  journal 


Aug.  8 


Central  Furniture  Co. 


Cash  discount 


u 


H 


Allowance  on  Inv.  of  3d  ins t.  2'fo' 

There  are  three  well-known  ways  of  entering  cash  discount,  viz. : 

1.  By  entering  in  the  cash  book  the  net  amount  of  the  bill  and  making  a  journal 
entry  for  the  amount  of  the  discount. 

2.  By  entering  the  full  amount  of  the  bill  on  one  side  of  the  cash  book  and  the 
amount  of  the  discount  on  the  opposite  side. 

3.  By  entering  the  discount  in  a  special  column  in  the  cash  book  and  the  net  of  the 
bill  in  the  regular  cash  column. 

Aug.  9 

Received  from  H.  W.  Erving  cash  on  account  $  100. 
Sold  for  cash  1  china  closet  $  27.50. 

Received  goods  ordered  from  Michigan  Furniture  Co.,  Grand  Rapids,  Mich.,  terms 
2  %  5  days,  1  %  10  days  : 

6  Oak  bedsteads  at  $  22  $  132. 

4  Cane-seat  rocking  chairs  at  $  6.50  26, 

4  Oak  bookcases  at  $16.25  65. 

6  Toilet  tables  at  $13.50  81. 

4  China  closets  at  $18.25  73. 

8  Oak  sideboards  at  $  26.50  212. 

$589. 
Less  20  and  5  %  141.36 

$447.64 
In  business  it  is  customary  to  prove  the  cash  account  as  found  in  the  cash  book 
each  day.;  that  is,  to  find  the  cash  book  balance  and  compare  it  with  the  amount  of  cash 
on  hand.  You  will  determine  the  balance  as  shown  by  your  cash  book  and  have  it 
approved.  Do  not  enter  the  balance  or  rule  up  the  book.  You  may  enter  the  footings 
in  small  pencil  figures. 

Received  from  Wilson,  Demming  &  Co.,  cash  for  invoice  of  the  5th. 

Received  from  Imperial  Hotel  Company,  on  account,  cash  $  100. 

Received  mdse.  ordered  from  Williamson  Chair  Co.  on  the  3d  inst.  as  follows : 


48  Leather-seat  dining  chairs  at  $  3 
36  Cane-seat  dining  chairs  at  $1.40 
6  Fancy  oak  rockers  at  $4.25 
2  Turkish  rockers  at  $  16.25 


Terms  2  %,  5  days 


Less  10  % 


$144. 
50.40 
25.50 
32.50 

$  252.40 
25.24 

$  227.16 


FURNITURE    BUSINESS  71 

Ai^g.    11 

Bought  bill  of  mdse.  on  account  from  L.  M.  Merrill  &  Co.,  Erie,  Pa.,  $238.90. 

5old  H.  W.  Erving,  on  account : 

18  Cane-seat  dining  chairs  at  $  x.xx  $   xx.xx 

12  Leather-seat  dining  chairs  at  $  3.25  39. 

2  Parlor  cabinets  at  $23  •  46. 

1  Ornamental  table  5.25 

3  Oak  bookcases  at  $24  72. 

$xxx.xx 
Returned  to  Williamson  Chair  Company : 

6  Fancy  rockers  at  $4.25  $25.50 

Less  10  %  2.55 

$22.95 

Note.  —  This  is  not  a  sale,  but  part  of  a  purchase  returned.  It  cannot  of  course  properly  be  entered 
among  the  sales.  If  the  number  of  such  transactions  is  large  enough  to  justify  their  use,  it  is  customary 
to  use  a  separate  book  for  recording  returned  purchases,  and  another  for  returned  sales.  You  may  enter 
this  transaction  and  similar  ones  in  the  day-book  journal.     See  form,  page  66. 

Ai/g.  13 
Paid  Frank  Andrews,  salesman,  cash  on  account  $  10. 
Mr.  Cummings,  proprietor,  took  from  the  store  for  use  in  his  home : 

1  Complete  bedroom  set  $90.00 

Less  10  and  15  %  xx.xx 

$  xx.xx 
Sold  for  cash  mdse.  amounting  to  $  106.40. 
Sold  Wm.  J.  Wagner,  2630  West  St.,  on  account: 

1  Roll-top  desk  $35. 

1  Oak  bookcase  xx.xx 

1  Office  chair  11.25 

$  xx.xx 
Aug.  14 

Paid  Williamson  Chair  Co.  for  invoice  of  the  9th,  $227.16,  less  $22.95,  goods  returned, 
cash  discount  2%. 

Received  from  Imperial  Hotel  Company  cash  for  balance  due  on  bill  of  the  4th  inst. 
(See  Aug.  9  for  part  payment.) 

Aiig.  15 
Paid  Emil  Hauck  wages  to  date  $10. 
Credited  bookkeeper  and  salesman  for  1  week's  wages. 
Sold  Imperial  Hotel  Company,  on  account: 

10  Iron  bedsteads  at  $  x.xx  $   xx.xx 

10  Wool  mattresses  at  $4.65  46.50 

5  Oak  wardrobes  at  $28.50  142.50 

10  Cane-seat  dining  chairs  at  $  2.20  xx.xx 

$XXX.XX 

Sold  mdse.  for  cash  $46.80, 


72  BOOKKEEPING 

Aug.  16 

Chas.  Moore  paid  his  note  of  the  1st  by  giving  a  new  note  at  60  days  for  ^800, 

interest  6%,  and  cash  for  balance  due  on  note  and  interest.     Balance  due  on  note  $200, 

interest  for  15  days,  at  5%.     Credit  "Interest  and  Discount"  account  for  the  interest. 

Edward  Alleston  paid  cash  for  his  note  of  the  0th  with  interest;  face  of  note  $60, 

interest  for  10  days. 

Imperial    Hotel   Company  returned    1   wardrobe   bought   on    the   15th    at   $28.50. 
Credit  through  journal. 

Aug.  17 

Received  from  Eastman,  Fish  &  Co.,  Rochester,  N.  Y.,  by  express : 

1  Mahogany  music  cabinet  $28. 

Less  20%  5.60 

$  22.40 
Paid  express  charges  on  above  $1.25.     Charge  "Freight  and  Expressage  "  account. 
Received  mdse.  ordered  from  Blair,  Jackson  &  Co.,  Indianapolis,  Ind.: 

6  Parlor  cabinets  at  $28,  terms  on  acct.  $168. 

Aug  18 

Paid  Michigan  Furniture  Company  for  invoice  of  9th  inst.,  less  1  %. 

Paid  cash  for  horse  feed  $6.80.     Charge  "Expense"  account. 

Paid  bookkeeper  and  salesman,  on  account,  $7.50  each. 

Sold  Robert  Whittaker,  344  Madison  St.,  on  account : 

1  Oak  dining  table  $  25.  ' 

6  Leather-seat  dining  chairs  at  $  x.xx  xx.xx 


Have  your  cash  balance  approved,  as  on  Aug.  9. 


$  xx.xx 


Aug.  20 
Mr.  Cummings  withdrew  from  business  for  personal  use  $50. 
Sold  Elmer  T.  Childs,  1160  Park  Av.,  on  account: 

1  Complete  bedroom  set  $90. 

Sold  Robert  Whittaker,  344  Madison  St.,  on  account : 

1  Brass  bedstead  $  xx.xx 

Aug  21 
Sold  H.  W.  Erving,  on  account : 

2  Brass  bedsteads  at  $32.50  $  xx.xx 
2  Oak  hall  stands  at  $  23.50  47. 

8  Leather-seat  dining  chairs  at  $  3.25  26. 

$xxx.xx 
Less  12.^  and  5%  xx.xx 


^xxx.xx 
Took  two  office  chairs  from  stock  for  use  in  office  at  $12.50  $25. 

Less  20  %  5. 

$20. 


FURNITURE   BUSINESS  73 

Aug.  22 
Paid  Emil  Hauck  salary  to  date  ^10,  and  credited  bookkeeper  and  salesman  for 
salaries  to  date. 

Sold  to  Theodore  Tyson,  405  Columbia  Av.,  on  account: 

6  Leather-seat  dining  chairs  at  $x.xx  $xx.xx 

Bought  from  Williamson  Chair  Company  for  cash  : 

36  Cane-seat  chairs  at  $1.12|-  ;^40.50 

Aug.  23 
Received  on  account  from  H.  W.  Erving,  cash  j^lOO. 
Sold  mdse.  for  cash  ;^  165.25. 

Aug.  24 
Received  from  Robert  Whittaker  note  at  10  days  for  $40,  no  interest,  to  apply  on 
bill  of  the  18th  inst. 

Bought  on  account  from  Williamson  Chair  Company  : 

10  Leather  rockers  at  $15.50  $lbb. 

Aug.  25 

Paid  bill  for  repairing  roof  of  store  (charge  to  expense)  $23.90. 

Note.  —  If  improvements  or  repairs  on  real  estate  are  of  such  character  as  to  add  permanently  to 
the  value  of  the  property,  it  is  proper  to  charge  such  expenditure  to  the  real  estate  account,  otherwise 
it  should  be  regarded  as  an  item  of  expense.  Not  infrequently  two  real  estate  accounts  are  kept,  one 
designated  as  the  investment  and  the  other  as  the  revenue  account.  If  both  accounts  are  kept,  repairs  are 
charged  to  the  latter  account  and  additions  and  permanent  improvements  to  the  former. 

Received  invoice  from  Tomlinson  Mfg.  Co.,  Toledo,  Ohio,  terms  net  cash,  for 

4  Brass  bedsteads  at  $29.60  $118.40 

Sent  check  in  payment  of  above. 

Aug.  27 
Received  cash  on  account  from  H.  W.  Erving  $200. 
Sold  Edward  Allerton  on  account: 

1  Sofa  bed  $35. 

1  Parlor  cabinet  36.50 

1  China  closet  19.50 

$91. 
Less  5  and  l^%  15.36 

$75.64 
Aug.  28 

Received  from  Elmer  T.  Childs  cash  on  account  $55. 
Sold  mdse.  for  cash  $163.70. 

Aug.  29 
Paid  Emil  Hauck  cash  for  week  ended  to-day,  and  credited  bookkeeper  and  salesman 
for  salaries  to  date. 

Paid  taxes  on  store  building  $47.63. 


74 


BOOKKEEPING 


Sold  £.  S.  Madsen,  2240  Washington  St.,  on  account: 
1  Oak  sideboard 
1  Oak  dining  table 
G  Leather-seat  dining  chairs  at  $4.10 


Atig.  30 
Paid  electric  light  bill  to  date  $6.35. 

Paid  Rand  Teaming  Co.  for  hauUng  during  month  ^31.50. 
Paid  freight  bills  for  month  $  81.72. 


Less  10% 


$50.00 
25.00 
24.60 

$    XX. XX 

x.xx 

$  xxx.xx 

Have  your  cash  balance  approved,  and  then  close  the  cash  book.     Also  have  your 
sales  book  approved  and  then  rule  it  up. 


Inventory,  Aug.  31 


8  Bedsteads,  brass 
20  Bedsteads,  iron 

6  Bedsteads,  oak 

7  Folding  beds 

4  Bookcases,  oak 

3  Bookcases,  mahogany 

6  Bookcases,  combination 

4  Cabinets,  parlor 
3  Cabinets,  music 

8  China  closets 

60  Chairs,  cane-seat  dining 
40  Chairs,  leather-seat  dining 

6  Chairs,  oak,  office 
10  Chairs,  fancy  rockers 

3  Chairs,  Turkish  rockers 
6  Chairs,  reclining 

6  Davenports 

6  Desks,  roll  top 
10  Desks,  writing,  oak 

6  Desks,  writing,  mahogany 

2  Hall  stands 

6  Lounges,  leather 
20  Mattresses,  wool 
10  Mattresses,  hair 

8  Tables,  oak,  dining 

6  Tables,  oak,  parlor 

4  Tables,  mahogany,  parlor 


at 

$23.50 

$188. 

al 

:       4.10 

82. 

at 

:     15. 

90. 

at 

.     15. 

105.  ■ 

at 

20. 

80. 

at 

;     26.50 

79.50 

at 

27.50 

165. 

at 

25. 

100. 

at 

8.50 

25.50 

at 

16.50 

132. 

at 

1.50 

90. 

at 

2.60 

104. 

at 

7.50 

45. 

at 

4.25 

42.50 

at 

16.25 

48.75 

at 

10.50 

63. 

at 

40. 

240. 

at 

24.25 

145.50 

at 

8. 

80. 

at 

12.50 

75. 

at 

.     15. 

30. 

at 

30. 

180. 

at 

:      3.50 

70. 

al 

t     12.50 

125. 

a 

t     20. 

160. 

a 

t     15. 

90. 

a1 

t     25. 

100. 

FURNITURE   BUSINESS  75 


Carried  forward, 

5  Tables,  oak,  library 

6  Tables,  oak,  toilet 

5  Sets,  dining-room 

6  Sets,  bedroom 
5  Sets,  parlor 

4  Ornamental  tables 

3  Sideboards 

4  Sofa  beds 

10  Wardrobes,  oak 

5  Wardrobes,  combination 


Less  25% 


at  $  14. 

70. 

at     22.50 

135. 

at     80. 

400. 

at     75. 

450. 

at  105. 

525. 

at     13. 

52. 

at     42.50 

127.50 

at     35. 

140. 

at     22. 

220. 

at     30. 

150. 

$5005.25 

1251.31 

$3753.94 


The  25%  deducted  from  gross  total  of  inventory  is  an  allowance  for  deterioration 
in  value  of  certain  goods  in  stock,  and  for  trade  discounts  allowed  from  list  prices  when 
goods  were  purchased. 

Real  estate  $5000. 

Expense  25. 

Office  fixtures  155. 

Insurance  22. 

Horses  and  wagons  350. 


LESSON    XXVII 
POSTING  SET   IV 

Required  of  the  Student.  —  1.  Enter  the  following  ledger  headings,  giving  each 
account  the  number  of  lines  indicated  :  Daniel  G.  Cummings,  Proprietor,  12 ;  Cash  8  ; 
Real  Estate  8;  Mdse.  1  page;  Expense  1  page;  Fixture  10;  Insurance  10;  Horse 
and  Wagon  10 ;  Freight  and  Expressage  8 ;  Cash  Discount  10 ;  Interest  and  Discount 
15;  Salary  15;  Bills  Receivable  20;  Bills  Payable  10 ;  Pupil,  Bookkeeper,  15;  Frank 
Andrews,  Salesman,  15  ;  Central  Furniture  Co.  10  ;  Williamson  Chair  Co.  10  ;  L.  M.  Mer- 
rill &  Co.  8 ;  Eastman,  Fish  &  Co.  8 ;  Blair,  Jackson  &  Co.  8 ;  Michigan  Furniture  Co. 
8  ;  H.  W.  Erving  15  ;  Edward  Alleston  12  ;  Wilson,  Demming  &  Co.  12  ;  Imperial  Hotel 
Co.  12;  H.  K.  Simpson  8;  W.  J.  Wagner  8;  Robert  Whittaker  8 ;  Elmer  T.  Childs 
8 ;  Theodore  Tyson  8  ;  E.  S.  Madsen  8 ;  Tomlinson  Mfg.  Co.  8 ;  Loss  and  Gain  20. 
Use  addresses  given  in  the  transactions  as  part  of  the  ledger  headings  of  personal 
accounts. 

2.  Post  all  items  from  the  journal,  cash  book,  and  sales  book  to  the  ledger.  Post- 
mark all  postings  in  each  book.  By  means  of  the  abbreviations  J.,  C.B.,  S.B.,  designate 
from  which  book  each  item  is  transferred  to  the  ledger.  Place  the  abbreviations  in  the 
explanation  space  to  the  left  of  the  page  numbers. 

In  posting  the  journal  entries,  follow  instructions  given  in  previous  sets. 

HOW    TO   POST    THE   CASH   BOOK 

If  each  transaction  recorded  on  left  side  of  the  cash  book  was  put  into  the  ordinary 
journal  form,  the  result  would  be  a  series  of  journal  entries  each  having  cash  for  the 
name  of  the  debit  item  and  the  name  in  the  account  space  of  the  cash  book  for  the 
credit  item.      It  is  suggested  that  the  pupil  make  these  journal  entries. 

Since  the  final  results  in  the  ledger  for  a  given  set  of  transactions  must  be  the  same 
whatever  the  form  of  the  original  entries,  it  follows  that  the  individual  items  on  the 
credit  side  of  the  cash  book  must  be  posted  to  the  credit  side  of  the  ledger  accounts. 
(Read  explanations  and  suggestions  given  in  Lesson  XXV.) 

QUESTIONS 

1.  What  amount  in  the  cash  book  equals  the  sum  of  all  the  items  posted  to  the 
credit  side  of  the  ledger  according  to  the  directions  given  above .-' 

2.  What  saving  of  labor  is  accomplished  by  posting  this  amount  to  the  debit  side  of 
the  cash  account  instead  of  the  individual  items  as  shown  by  the  journal  entries .-' 

3.  Will  the  result  in  the  cash  account  be  the  same  by  the  two  methods  of  posting  ? 
How  about  the  amount  of  space  required .'' 

By  a  process  of  reasoning  similar  to  the  above  you  should  be  able  to  determine  how 
to  post  the  credit  side  of  the  cash  book.  Journalizing  each  transaction  will  be  of  assist- 
ance in  determining  how  to  proceed. 

76 


POSTING  77 

QUESTIONS 

1.  How  would  you  state  a  general  rule  for  posting  the  cash  book? 

2.  Would  the  balance  of  the  ledger  be  preserved  if  only  the  balance  of  the  cash 
book  were  carried  to  the  cash  account  ?     Explain  fully. 

HOW   TO   POST  THE   SALES   BOOK 

If  all  the  entries  in  the  sales  book  were  journalized,  the  result  would  be  a  scries  of 
journal  entries,  each  having  the  name  of  a  personal  account  on  the  debit  side  and  mer- 
chandise on  the  credit  side.  The  sum  of  the  amounts  on  either  side  of  these  entries 
would  obviously  be  the  total  of  the  sales.  Therefore  in  posting  the  sales  book  the 
accounts  of  the  several  purchasers  must  be  debited,  and  the  merchandise  account  must 
be  credited  for  the  total  sales. 

After  having  posted  the  transactions  as  instructed,  check  over  your  postings  to  insure 
accuracy.  Use  small  check  marks  in  each  book,  placing  them  at  the  edge  of  the  ruled 
line  at  the  left  of  the  amount.  This  may  seem  like  useless  work,  but  if  errors  have 
been  made  in  posting,  it  is  better  to  discover  them  before  attempting  to  make  a  trial 
balance. 

You  may  now  enter  pencil  footings  in  the  ledger  and  take  a  trial  balance. 

HOW  TO  FIND  ERRORS  IN  TRIAL  BALANCES 

If  every  part  of  your  work  is  free  from  errors,  the  two  sides  of  your  trial  balance  will 
foot  up  equally.  In  a  previous  lesson  your  attention  was  directed  to  certain  classes  of 
errors  that  the  trial  balance  will  not  reveal.  But  the  existence  of  any  error  that  destroys 
the  equilibrium  of  the  ledger  is  sure  to  be  discovered  when  an  attempt  is  made  to  obtain 
a  trial  balance.  Remember  that  the  possibihty  of  a  trial  balance  depends  upon  strict 
observance  of  the  principle  of  equality  of  debits  and  credits. 

The  one  infallible  method  of  discovering  errors  is  the  rechecking  of  all  postings  and 
the  verifying  of  all  computations.  Check  marks  must  be  entered  in  the  ledger  as  well 
as  in  the  books  from  which  the  posting  is  done.  A  little  reflection  will  convince  you  of 
the  foolishness  of  checking  items  in  one  place  only. 

Bookkeepers  and  accountants  make  use  of  numerous  devices  to  aid  them  in  deter- 
mining the  character  of  errors  or  in  locating  them,  but  frequently  in  the  end  it  is  found 
necessary  to  check  the  work  item  by  item.  Since  you  have  the  footings  of  all  the  books 
from  which  you  posted  and  have  not  ruled  up  any  of  the  accounts  in  the  ledger,  you 
may  test  the  footings  of  your  trial  balance  by  the  method  illustrated  below. 

The  Journal         Total  Debits  Total  Credits 

Cash  Book  Total  Receipts  and  Payments  Total  Receipts  and  Payments 

c  1      vi     ]r         I  Total  of  items  posted  to 

[  Dr.  of  personal  accounts  Total  Sales 
Trial  Balance  Footings       ^xxxxx.xx  $xxxxx.xx 


78  BOOKKEEPING 


QUESTIONS 

1.  When  you  had  posted  the  day-book  journal  items  of  this  set,  could  you  have 
secured  a  trial  balance  ? 

2.  When  the  debit  side  of  the  cash  book  had  been  posted,  could  a  trial  balance 
have  been  secured  ?     Why  ? 

3.  When  the  credit  side  of  the  cash  book  had  been  posted,  could  a  trial  balance 
have  been  secured  ?     Why  ? 

4.  How  does  the  cash  account  in  the  ledger  compare  with  the  cash  book  ?    How  do 
the  balances  compare? 

5.  What  items  make  up  the  accounts  receivable  ? 

6.  What  items  make  up  the  accounts  payable  ? 

7.  How  does  the  total  of  the  unpaid  notes  in  the  bills  receivable  book  agree  with 
the  balance  shown  in  the  ledger  account  of  bills  receivable  ? 

8.  Test  the  bills  payable  in  a  similar  way. 

9.  When  you  had  posted  the  debits  from  the  sales  book,  could  you  have  made  a 
trial  balance  ?     Why  ? 

10.  Could  you  have  made  the  trial  balance  after  posting  the  total  sales  ?     Why  ? 

11.  In  the  form  for  testing  the  trial  balance  footings,  why  must  the   sum   of  the 
three  items  on  the  left  equal  the  sum  of  the  three  on  the  right  ? 

12.  Why  must  these  footings  equal  the  trial  balance  footings  ? 

13.  What  conclusion  would  you  draw  from  each  of  the  following  conditions  : 

(a)  If  both  of  the  trial  balance  footings  differed  from  the  results  given  by  the  test  ? 
(d)  If  one  of  the  footings  was  the  same  as  those  given  by  the  test,  the  other  differ- 
ent.? 

14.  What  modification  of  the  test  would  be  necessary  under  the  following  conditions  : 
(a)  If  one  or  more  accounts  whose  footings  are  equal  had  been  omitted  from  the 

trial  balance  ? 

(d)  If  only  the  balances  had  been  entered  in  one  or  more  of  the  accounts  ? 


LESSON   XXVIII 
MAKING    THE    BALANCE    SHEET   AND    CLOSING   THE   LEDGER 

Required  of  the  Student.  —  1.    Make  out  a  balance  sheet. 

2.  Open  an  account  with  Loss  and  Gain,  if  you  have  not  already  done  so. 

3.  Enter  inventories. 

4.  Close  accounts  to  Loss  and  Gain. 

5.  Close  loss  and  gain  account  to  the  proprietor's  account. 

6.  Close  proprietor's  account,  bringing  down  the  balance. 

7.  Close  bills  receivable  and  bills  payable  accounts  and  bring  down  the  balances. 

8.  Take  a  second  trial  balance. 


79 


LESSON    XXIX 
SET   IV.  —  Continued 

Required  of  the  Student.  —  Write  up  the  transactions  for  September. 
Use  the  same  books  and  enter  the  transactions  as  in  August. 

Post  the  journal,  cash  book,  and  sales  book  entries  under  the  headings  already  in  the 
ledger.     Open  additional  accounts  if  necessary. 

At  the  end  of  the  month  make  a  statement  or  balance  sheet  and  close  the  books. 

TRANSACTIONS   FOR   SEPTEMBER 

Sept.  1 
Sold  Theodore  Tyson  on  account: 

1  Brass  bedstead  $  xx.xx 

1  Sideboard  50.00 

$   xx.xx 
Paid  cash  for  shoeing  horses  $4.50. 

Rented  3d  floor  of  our  store  building  to  James  Egan  at  $20  per  month.     Received 
his  check  for  one  month's  rent  in  advance.     Cr.  Expense. 

Sept.  3 
Sold  for  cash  : 

12  Cane-seat  dining  chairs  at  $x.xx      ^  $  xx.xx 

1  Dining-room  table,  oak  25.00 

$   xx.xx 
Sold  I.  C.  Swain,  965  East  Av. : 

1  Oak  writing  desk 

1  Toilet  table 

1  Combination  bookcase 

Robert  Whittaker  paid  cash  for  his  note  of  the  24th  ult. 

Sept.  4 

Sold  Wilson,  Demming  &  Co.  10  days  net: 

24  Cane-seat  chairs  at  $  x.xx  $   xx.xx 

12  Leather-seat  chairs  at  $x.xx  xx.xx 

3  Fancy  rockers,  oak,  at  $b.  xx.xx 

2  Wardrobes  at  $  24.50  xx.xx 
2  Parlor  sets  at  $  124.  xxx.xx 


10%  and  5%  disc. 

Paid  Frank  Andrews,  salesman,  on  account,  $15. 

80 


$  xxx.xx 


$  xxx.xx 


FURNITURE   BUSINESS  81 

Sept.  5 

Paid  Emil  Hauck  one  week's  wages,  ;^10. 

Credited  bookkeeper  and  salesman  each  with  week's  wages. 

Sold  for  cash  : 

1  Iron  bedstead  $    5.50 

1  Wool  mattress  4.50 

1  Toilet  table  26.25 

1  Combination  bookcase  35.50 

$71.75 
Bought  for  cash  2  brass  bedsteads  at  $  23.50  $  17. 

Sep/.  6 

Received  from  H.  K.  Simpson  a  note  signed  by  John  Coleman,  dated  July  15,  at 
60  days,  face  $120,  interest  6  %,  and  cash  to  balance  his  account.  Interest  accrued  and 
allowed  $  1.06. 

Sold  Imperial  Hotel  Company,  10  days  net: 

2  Brass  bedsteads  at  $  xx.xx  $    xx.xx 
2  Hair  mattresses  at  $13.50  27. 

2  Fancy  rockers  at  $4.50  9. 

2  Wardrobes,  oak,  at  $  27.  54. 

^  XXX. XX 

Sep/.  7 

Bought  from  Williamson  Chair  Company,  5  days  net : 

48  Leather-seat  dining  chairs  at  $  2.90  $  139.20 

8  Fancy  rockers,  oak,  at  $4.10  32.80 

4  Turkish  rockers  at  $  16.  64. 

$  236.00 
Less  10  %  23.60 

$212.40 
Received    from    the   Imperial    Hotel  Company  cash  for  our   bill  of  Aug.  15,  less 
$28.50  for  returned  goods. 

Sep/.  8 
Gave  Williamson  Chair  Co.  10-day  note,  interest  6  %,  for  invoice  of  Aug,  24,  $  155. 
Theo.  Tyson  paid  cash  for  purchase  of  Aug.  22. 

Sep/.  10 

Elmer  T.  Childs  paid  cash  to  balance  his  account. 

Gave   Blair,   Jackson   &    Co.    10-day   note,   interest  6%,   for   invoice  of   Aug.  17. 

Frank  Andrews  drew  cash  $25. 

Have  your  cash  balance  approved  and  then  balance  the  cash  book.  Since  the 
cash  book  has  been  balanced,  it  is  necessary  to  post  the  total  receipts  and  payments 
just  as  you  did  at  the  close  of  August. 


82  BOOKKEEPING 

Sept.  11 

Sold  French  Furniture  Co.,  Kansas  City,  Mo.,  2  %  5  days : 

6  Brass  bedsteads  at  $  XX. XX  ^xxx.xx 

6  Hair  mattresses  at  $  18.  108. 

2  Bedroom  sets  at  $  90.  180. 
30  Leather-seat  dining  chairs  at  $  3.25  97.50 

%  XXX. XX 

Less  10  and  10  %  xx.xx 

$  xxx.xx 
Sept.  12 

Emil  Hauck's  salary  has  been  increased  $1  per  week.  Paid  him  cash  $11  for 
week  ended  to-day. 

Credited  bookkeeper  and  salesman  for  salaries  for  week  ended  to-day. 

Paid  repairs  on  wagon  ;^3.75. 

Paid  Williamson  Chair  Co.  for  invoice  of  the  7th. 

Sept.  13 

John  Coleman  paid  his  note  due  to-day  with  interest,  face  $120,  interest  for  GO  days 
at  6  %. 

Sold  to  Walter  Rogers,  1972  Lincoln  St.,  1  parlor  set  $124. 

Received  in  payment  John  Fischer's  note,  Rogers'  favor,  at  30  days,  dated  Aug.  20, 
interest  5%,  for  $100;  interest  accrued  and  allowed  $.33,  cash  for  balance. 

Sept  14 
Received  from  Wilson,  Demming  &  Co.  their  note  at  30  days,  0  %  interest,  for  in- 
voice of  4th  inst.,  due  to-day. 
Sold  for  cash : 

4  Folding  beds  at  $19.20  $  76.80 

Sept.  15 
Imperial  Hotel  Company  paid  for  invoice  of  the  6th  inst. 

French  Furniture  Company  paid  for  invoice  of  the  11th  inst.,  less  cash  discount. 
Edward  Alleston  paid  cash  for  invoice  of  Aug.  27th.     Sold  him  on  account  5  days: 

3  Folding  beds  at  $  19.20  $  57.60 

1  Brass  bedstead  xx.xx 
10  Iron  bedsteads  at  $  5.25                                                       52.50 

2  Bookcases,  oak,  at  $  24.  48. 

1  Mahogany  bookcase  32.50 

$  xxx.xx 
Sept.  17 

E.  S.  Madsen  has  failed  in  business  and  we  have  accepted  cash,  70}^  on  the  dollar, 
for  his  invoice  of  Aug.  29  ;   the  balance  is  lost.     Make  a  journal  entry  for  the  loss. 
Paid  cash  for  horse  feed  $  26.18. 


FURNITURE    BUSINESS  83 

Sept.   18 
Paid  cash  for  note  dated  Sept.  8,  favor  Williamson  Chair  Company,  with  interest, 
face  of  note,  $155,  interest  for  10  days  (J  %. 
Sold  for  cash, 

2  Oak  bedsteads  at  $  21.50  $    xx.xx 

2  Mahogany  bookcases  at  $  32.25  64.50 

2  Parlor  cabinets  at  $  28.40  56.80 

3  Music  cabinets  at  $  xx,  xx.xx 

$  XXX. XX 

Sept  19 
Paid  Emil  Hauck,  and  credited  bookkeeper  and  salesman  with  wages  for  week. 
John  Fischer  paid  cash  for  his  note  received  on  the  13th,  with  interest. 
Sold  D.  E.  Casselberry,  459  N.  20th  St.,  on  account: 

1  Combination  bookcase  $  35. 

1  Sideboard,  oak  50. 

6  Leather-seat  dining  chairs  at  $x.xx  xx.xx 

f,  XXX. XX 

Sept  20 
Pupil  drew  cash  on  account,  $  100. 
Theo.  Tyson  paid  cash  for  invoice  of  the  1st. 

Paid  Blair,  Jackson  &  Co.  for  note  dated  the  10th  inst.  and  interest. 
Bought  from  Central  Furniture  Co.  invoice  of  mdse.  $  1684.76,  terms  3  %  5  days. 
Balance  the  cash  book  again,  following  directions  at  close  of  transactions  of  Sept.  10. 

Sept  21 
Received  H.  W,  Erving's  note  for  30  days,  interest  5  %,  to  balance  account. 
Allowed  D.  E.  Casselberry  a  claim  of  $  4.50  for  defect  in  wardrobe  sold  him  on  the 
19th  inst. 

Sept  22 
Sold  H.  W.  Erving  on  account : 

1  Dining  room  set  $    92.50 

1  Parlor  set  124. 

1^216.50 
Discounted   at  bank  Wilson,  Demming  &   Co.'s  note,  dated  the  14th,  at  30  days. 
Face  $ .     Discount  off,  22  days  at  7  %. 

Sept  24 
Sold  Imperial  Hotel  Company  on  account: 

4  Oak  bedsteads  at  $  19.15  $   76.60 
1  Sideboard,  oak  50. 

3  Combination  bookcases  at  $  37.50  112.50 

$  239.10 
Daniel  G.  Cummings  discounted  at  the  bank  his  30-day  note  indorsed  by   H.  W. 
Erving.     Face  $2000;  discount  at  7  %.     Proceeds  placed  to  Mr.  Cummings'  credit. 


84  BOOKKEEPING 


Sept.  25 

Frank  Andrews  drew  cash  $  25, 
Sold  H.  W.  Erving  on  account : 

3  Oak  writing  desks  at  $  10.  $    30. 

1  Parlor  set  124. 

2  Parlor  cabinets  at  $  32.50  65. 

3  Fancy  rockers  at  $  5.25  15.75 

$  234.75 

Discounted  at  the  bank  H.  W.  Erving's  note  of  the  21st  inst.,  face  $ ;  discount 

off,  26  days,  at  7  %. 

Paid  Central  Furniture  Co.  for  invoice  of  Sept.  20,  less  3  %  cash  discount. 

Sept.  26 

Paid  for  advertising  and  printing  $  28.30. 

Sold  K.  G.  Tucker  &  Sons,  St.  Paul,  Minn.,  2%  3  days; 

2  Oak  bookcases  at  $  xx.xx  $  xx.xx 

2  Oak  office  chairs  at  $  9.  18. 

3  China  closets  at  $  21.25  63.75 

2  Roll-top  desks  at  $  27.50  •  55. 

4  Oak  writing  desks  at  $  10.  40. 

$  XXX. XX 

Less  5  %  XX.XX 

$  XXX. XX 

Credited  bookkeeper  and  salesman  and  paid  Emil  Hauck  wages  to  date. 

Sept.  27 

Bought  from  Michigan  Furniture  Co.,  cash  2  %  '- 

5  Oak  dining  tables  at  $16.50 

3  Oak  parlor  tables  at  $  12.50 

4  Bedroom  sets  at  $  15. 

5  Dining-room  sets  at  $  80. 
4  Oak  sideboards  at  $  32.50 

6  Oak  bedsteads  at  $  16. 


Less  5  %  &  121  (f^ 


$     82.50 

37.50 

300. 

400. 

130. 

96. 

$  1046.00 

176.51 

$    869.49 


Paid  above  bill  less  cash  discount.     Discount  off  $  17.39. 
Sold  for  cash,  6  cane-seat  chairs  at  $  x.xx 


FURNITURE    BUSINESS  85 

Sept.  28 
Sold  H.  K.  Simpson: 

2  Hall  stands  at  $17.50  $    35. 

1  Davenport  50. 

1  Mahogany  parlor  table  32.75 

1  Dining  room  set  95. 

$212.75 
Received  his  10-day  note  without  interest  in  payment. 

Sept.  29 

Discounted  at  the  bank  H.  K.  Simpson's  note  dated  the  28th  inst.,  discount  off, 
9  days  7  %. 

Paid  freight  and  express  for  this  month  $43.75. 

Paid  electric  light  bill  $  12.80. 

Paid  small  expense  bills  for  this  month  $  18.72. 

Bought  for  cash  10  tons  coal  at  $  7.25,  for  use  in  our  store,  and  paid  cash  for  6  tons 
delivered  to  Mr.  Cummings'  home  at  $  7.50  per  ton. 

Paid  pupil  in  full  of  account. 

Paid  Frank  Andrews  in  full  of  account. 

Paid  Merrill  &  Co.  in  full  of  account. 


9  Bedsteads,  iron 

6  Bedsteads,  oak 

5  China  closets 

18  Chairs,  C.  S.  dining 
40  Chairs,  L.  S.  dining 

4  Chairs,  oak  office 

10  Chairs,  fancy  rockers 

7  Chairs,  Turkish  rockers 

6  Chairs,  reclining 

5  Davenports 

4  Desks,  roll-top 

2  Desks,  oak  writing 

6  Desks,  mahogany  writing 
6  Lounges,  leather 

19  Mattresses,  wool 

2  Mattresses,  hair 
12  Tables,  oak  dining 

9  Tables,  oak  parlor 

3  Tables,  mahogany  parlor 

5  Tables,  oak  library 


Inventory,  Sept.  29, 

19— 

@ 

$  4.10 

$      36.90 

@ 

15. 

90. 

@ 

16.50 

82.50 

@ 

1.50 

27. 

@ 

2.60 

104. 

@ 

7.50 

30. 

@ 

4.25 

42.50 

@ 

16.25 

113.75 

@ 

10.50 

63. 

@ 

40. 

200. 

@ 

24.25 

97. 

@ 

8. 

16. 

@ 

12.50 

75. 

@ 

30. 

180. 

@ 

3.50 

66.50 

@ 

12.50 

25. 

@ 

20. 

240. 

@ 

15. 

135. 

@ 

25. 

75. 

@ 

14. 

70. 

Forward 

$  xxxx.xx 

86 


BOOKKEEPING 

Forward 

^xxxx.xx 

@ 

$  22.50 

90. 

@ 

80. 

640. 

@ 

75. 

600. 

@ 

13. 

52. 

@ 

42.50 

170. 

@ 

35. 

140. 

@ 

22. 

182. 

@ 

30. 

150. 

4  Tables,  toilet 
8  Dining-room  sets 
8  Bedroom  sets 
4  Ornamental  tables 
4  Sideboards 

4  Sofa  beds 
6  Wardrobes,  oak 

5  Wardrobes,  combination 

^3743.15 
Less  25  %  935.79 

;g  2807.36 
Plus  entire  purchase  from  Central  Furniture  Co.,  Sept.  20.  1684.76 

15  4492.12 
Real  Estate  $  5000. 

Office  Fixtures  140. 

Insurance  20. 

Horses  and  Wagons  335. 

Expense  —  coal,  blankbooks,  etc.  100, 


LESSON    XXX 
SHIPMENTS   AND   CONSIGNMENTS 

Introduction.  —  In  certain  lines  of  business  —  the  produce  business,  for  example  — 
a  merchant  frequently  finds  that  he  has  goods  on  hand  for  which  there  is  little 
demand  in  his  home  market.  He  learns,  however,  that  there  is  a  good  demand  for 
the  commodities  in  other  markets.  He  therefore  ships  these  goods  to  a  merchant 
in  the  more  favored  locality  to  be  sold.  Firms  who  sell  goods  for  others  are  known  as 
commission  merchants,  or  commission  houses.  They  usually  charge  a  certain  percent- 
age of  the  selUng  price  for  their  services.  It  is  to  be  observed  that  the  goods  received 
by  a  commission  firm  remain  the  property  of  the  sender  until  they  are  sold. 

The  party  sending  the  goods  is  called  the  "  consignor,"  the  one  receiving  them  the 
"consignee."  The  consignor  calls  the  goods  sent  to  another  for  sale  a  "shipment." 
The  commission  merchant  calls  them  a  "consignment." 

When  a  shipment  is  made,  an  account  is  usually  opened  by  a  journal  entry  like 
the  following : 

Jan.  1.  Shipment  Jones  &  Co.,  Buffalo  $  300. 

.  Mdse.  $300. 

The  new  title  shows  the  disposition  of  the  goods,  both  to  whom  and  where.  When 
the  sale  is  reported  and  cash  remitted,  it  is  recorded  as  follows  : 

Jan.  20.  Cash  ;^  325. 

Shipment  Jones  &  Co.,  Buffalo  $325. 

If  the  account  sale  was  not  accompanied  by  a  cash  remittance,  the  merchant  would 
be  debited  thus  : 

Jones  &  Co.,  $325. 

Shipment  Jones  &  Co.,  Buffalo  $  325. 

When  the  commission  merchant  receives  the  goods,  no  entry  of  a  debit  or  credit 
nature  is  made  by  him  unless  he  pays  the  freight  or  some  other  charge,  as  the  goods 
do  not  belong  to  him.      If  freight  is  paid,  the  record  will  be: 

(Sender's  Name)  Consignment  $5.50 

Cash  $5.50 

As  sales  are  made,  the  consignment  account  will  be  credited  instead  of  merchan- 
dise. When  all  the  goods  are  sold,  the  consignment  account  will  be  charged  with 
commission,  etc.  The  difference  will  then  show  the  balance  due,  and  when  paid,  this 
will  be  charged  to  the  consignment,  thus  closing  the  account.  The  commission  is  the 
commission  merchant's  gain,  or  pay  for  his  services. 

The  valuation  placed  on  merchandise  when  shipped  to  be  sold  on  commission  is 
generally  the  amount  at  which  it  would  be  inventoried  if  retained  in  stock.  Any 
expenses  incurred  in  sending  a  shipment  should  be  charged  to  it. 

87 


88 


BOOKKEEPING 


LEDGER   ACCOUNT   WITH   A   SHIPMENT 


^dl/ii^e'M.I^     Gai^cd^   S^  (^.,        ^M^MiA,    c/k 


Jan. 


Loss  and  Gain 


300 

25 

19— 

Jan. 

20 

325 

325 


325 


Required  of  the  Student. — Journalize  the  following  transactions,  open  accounts  with 
the  shipments,  post  the  debit  and  credit  items  affecting  shipments,  and  close  the  accounts. 

July  1,  19 — .  Shipped  to  Cerveny  &  Anderson,  Philadelphia,  Pa.,  to  be  sold  on 
our  account  and  risk,  500  bushels  of  barley,  invoiced  at  50  ^  per  bushel. 

July  3.  Shipped  to  Mann  &  Co.,  Boston,  Mass.,  to  be  sold  on  our  account  and  risk, 
1  car  potatoes,  200  bushels,  at  75  ^  per  bushel. 

July  5.  Shipped  to  E.  Earl  &  Sons,  Erie,  Pa.,  1  car  sweet  potatoes,  225  bushels,  at 
;^1.25  per  bushel.     Prepaid  freight  in  cash  $29.60. 

July  9.  Received  on  account  sales  from  Cerveny  &  Anderson  together  with  check 
for  proceeds,  $290.76. 

July  14.  Received  notice  of  destruction  of  shipment  made  on  the  3d  inst.  The 
shipment  is  a  total  loss. 

July  20.  Received  on  account  sales  of  shipment  made  on  the  5th  inst.  The  pro- 
ceeds, amounting  to  $  360.50,  have  been  credited  to  our  account. 


LESSON    XXXI 
DRAFTS 

In  the  course  of  business  it  frequently  becomes  necessary  to  make  payments  at  dis- 
tant places.  It  is  obvious  that  this  might  be  done  by  carrying  the  money  from  one 
place  to  another.  But  this  would  involve  the  risk  of  loss,  prevent  the  use  of  the' money 
while  in  transit,  and  be  expensive. 

For  example,  if  A  of  Chicago  buys  merchandise  amounting  to  ;^1000  from  B  of 
New  York,  and  B  of  New  York  buys  produce  from  D  of  Chicago  for  the  same 
amount,  it  is  clear  that  all  obligations  might  be  canceled  by  transferring  the  money 
in  both  directions  between  the  cities.  But  after  all  the  time,  risk,  and  expense  involved, 
there  would  be  just  as  much  money  in  each  city  as  at  the  start. 

Early  in  the  history  of  commerce,  methods  were  adopted  to  avoid,  as  far  as  possible, 
the  actual  transfer  of  money.  This  was  accomplished  by  the  use  of  drafts,  or  bills  of 
exchange.  These  were  orders  by  which  one  party  directed  a  second  party  to  pay  a 
specified  amount  to  a  third  party  or  to  his  order. 

To  illustrate  the  use  of  such  papers,  return  to  the  transactions  above.  B,  who  is  in 
New  York,  has  $1000  due  him  from  A,  in  Chicago.  Suppose  that  at  the  same  time  B 
owes  D,  also  in  Chicago,  $  1000.  Instead  of  actually  transmitting  the  money,  B  writes 
an  order  directing  A  to  pay  the  $1000,  due  B,  to  D.  This  order,  which  is  a  draft,  is 
sent  to  D,  who  takes  it  to  A  and  receives  the  $1000,  or  the  assurance  that  he  will 
receive  it  after  a  certain  time.  No  money  has  been  carried  between  the  cities  and  yet 
the  two  debts  have  been  canceled. 

B,  who  signs  it,  is  called  the  drawer  of  the  draft;  D,  to  whom  it  is  made  payable,  the 
payee ;  and  A,  who  is  directed  to  pay  it,  the  drawee. 

The  use  of  drafts  is  based  on  the  supposition  that  the  drawee  has  in  his  possession 
funds  belonging  to  the  drawer,  or  that  he  is  in  some  manner  under  obligation  to  pay  the 
drawer.  The  obligation  may  be  an  agreement  between  the  parties  to  honor  each  other's 
drafts. 

When  the  payee  of  a  draft  presents  it  to  the  drawee  for  payment,  the  latter  may 
either  express  his  willingness  to  pay  or  refuse  to  do  so.  If  the  draft  is  payable  after 
sight,  as  in  the  form  below,  the  drawee  gives  his  written  promise  to  pay  when  it 
becomes  due.  He  does  this  by  writing  the  word  "Accepted,"  with  his  name  and  date, 
across  the  face  of  the  draft.  If  the  draft  is  payable  at  sight,  it  must  be  paid  when 
presented.     In  either  case  the  draft  is  said  to  have  been  honored. 

If  the  parties  to  a  draft  are  individuals  or  firms,  the  paper  is  called  an  individual  or 
personal  draft.  If  the  drawer  and  drawee  are  banks,  or  banking  houses,  the  draft  is  called 
a  bank  draft.  Although  the  theory  on  which  is  based  the  use  of  personal  drafts  as 
described  above,  is  correct,  in  practice  personal  drafts  are  at  the  present  time  rarely,  if 
ever,  used.  Bank  drafts  are  used  extensively  in  making  payments  in  distant  places. 
Banks  furnish  these  drafts  to  depositors  generally  without  charge  for  exchange. 


90 


BOOKKEEPING 


COLLECTIONS    BY   MEANS   OF   DRAFTS 


The  form  below  is  a  three-party  personal  draft.     Although  this  particular  type  is 
now  very  rarely  used,  it  will  serve  to  illustrate  the  general  idea  of  drafts. 


FORM   OF   DRAFT 

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In  theory  Mr.  Carter  sends  the  above  draft  to  Mr.  Frederick  and  he  in  turn 
presents  it  to  Mr.  Taylor.  Since  the  draft  is  not  to  be  paid  immediately,  Mr.  Taylor 
may  refuse  to  honor  it  or  may  accept  it.  The  latter,  as  noted  above,  means  that  he 
gives  his  promise  to  pay  at  maturity  the  amount  named  in  the  draft.  The  manner  of 
accepting  a  draft  has  been  explained.  If  Mr.  Frederick  wishes  to  make  a  payment  with 
the  draft,  he  may,  by  means  of  an  indorsement,  transfer  his  title  to  the  proper  party. 

The  form  of  draft  used  for  the  purpose  of  making  collections  is  like  the  form  in  this 
lesson,  except  that  it  is  customary  to  make  a  bank  the  payee.  This  bank  will  forward 
the  draft  to  the  bank  with  which  the  drawee  transacts  business,  and  the  latter  bank  will 
request  the  payment.  If  the  draft  is  honored,  —  that  is,  paid,  —  the  drawer  will  receive 
credit  for  the  face  less  a  small  charge  that  is  usually  deducted  for  expense  of  collect- 
ing. The  uses  and  forms  of  bank  drafts  and  of  drafts  used  for  making  collections  will 
be  more  fully  explained  and  illustrated  in  another  lesson. 

Required  of  the  Student.  —  Write  the  drafts  used  in  the  following  exercises : 

1.  J.  Allison  &  Sons,  Philadelphia,  Pa.,  on  Jan.  4,  19 — ,  drew  on  Benjamin  Hood  & 
Co.,  Cleveland,  Ohio,  at  10  days'  sight  for  $  600,  favor  P.  M.  Newmark. 

2.  Henry  Townsend  &  Co.,  Duluth,  Minn.,  owed  me  $  260,  and  I  drew  on  them  for 
the  amount  through  the  First  National  Bank.  Use  the  date  of  writing  and  the  name 
of  your  town  or  city  in  the  heading. 

3.  Draw  at  30  days'  sight  on  Raymond  Rogers,  Baltimore,  Md.,  favor  Eugene  Buck, 
for  $  183.40.  Use  the  date  of  writing  and  the  name  of  your  city.  On  the  supposition 
that  the  draft  is  accepted  4  days  later,  write  the  acceptance. 


DRAFTS  91 

4.    Elmer  Rixon  &  Co.,  Altoona,  Pa.,  drew  on  you  at  sight  through  the  Central 
National  Bank,  of  that  city,  on  Jan.  2,  19—,  for  $04.20. 

QUESTIONS 

1.  In  each  of  the  drafts  written,  who  is  the  drawer  .-•     Payee  .-'     Drawee .'' 

2.  In  each,  what  entry  should  the  drawee  make  when  he  honors  the  draft .'' 

3.  What  entry  should  the  payee  make  in  each  case  when  the  draft  is  honored .-' 

4.  What  entry  should  the  drawer  make  ? 

5.  How  many  uses  of  drafts  are  illustrated  in  the  exercises  .-' 


LESSON    XXXII 
BUSINESS    LETTER   WRITING 

Introduction.  — The  three  ordinary  means  used  by  the  business  man  to  communicate 
with  dealers  and  customers  are  the  letter,  the  telephone,  and  the  telegraph.  It  is  not 
the  purpose  of  this  lesson  to  discuss  these  means  of  communication  in  detail,  but  to  give 
a  few  hints  relating  principally  to  the  correct  form  of  a  business  letter.  The  student  will 
find  a  fuller  discussion  of  business  correspondence  in  special  works  on  this  subject. 

Every  business  letter  should  possess  the  following  qualities : 

1.  It  should  be  well  written. 

2.  It  should  be  neat. 

3.  Its  meaning  should  be  clear. 

4.  It  should  be  as  brief  as  possible,  consistent  with  clearness. 

5.  It  should  be  courteous. 

6.  It  should  be  mechanically  correct. 

When  answering  a  letter,  give  the  date  of  the  letter  answered.  When  paying  a 
bill,  give  the  full  amount  of  the  bill  and  discount,  if  deducted. 

Required  of  the  Student.  —  In  preparing  the  following  exercises  use  regular  com- 
mercial letter  paper,  which  measures  usually  S^  x  11  inches.  Rule  two  parallel  lines 
at  the  left,  one  three  quarters  and  the  other  one  and  one  half  inches  from  the  left  edge 
of  the  paper.  There  will  be  no  writing  to  the  left  of  the  first  line ;  all  paragraphs  will 
begin  at  the  second  line.  If  you  find  that  you  need  additional  information  in  writing 
the  letters  required  by  the  exercises,  apply  to  your  teacher  or  refer  to  some  work  on 
letter  writing. 


92 


BUSINESS   LETTER   WRITING  93 


LETTER   ORDERING  GOODS 
OFFICE   OF 

JAMES   BROWN   &  SONS 

MERCHANTS 


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94  BOOKKEEPING 

Required  of  the  Student.  — Prepare  the  following  letters,  supplying  dates  and  using 
your  home  address  : 

Example  1.  —  Order  from  D.  C.  Heath  &  Co.,  Boston,  Mass.,  a  number  of  books; 
ask  them  to  send  the  goods  cash  on  delivery. 

Example  2.  —  Order  from  Claflflin  &  Co.,  New  York  City,  five  items,  dry  goods,  ask- 
ing for  best  terms,  and  giving  your  banker  as  a  reference. 

Example  3. —  You  owe  Brown  &  Brown  $125  for  a  horse,  for  which  you  are  to  give 
your  note  at  30  days,  bearing  6  %  interest.     Write  a  letter  mclosing  the  note. 

Example  4. — You  received  the  goods  ordered  in  Example  2,  amounting  to  $125.60, 
less  2  %  for  cash.  Write  a  letter  stating  that  you  are  inclosing  a  bank  draft  for  the  bill, 
less  the  discount.     Use  the  following  form  in  the  body  of  the  letter : 

Bill  of  goods.  Mar.  1,  19—  $125.60. 

2  %  Cash  Discount  2.51. 

Bank  draft  inclosed  for  $123.09. 

Example  5. — Order  from  Crane  Manufacturing  Company,  Philadelphia,  Pa.,  dealers 
in  stoves,  etc.,  five  items ;  give  reference. 

Example  6. — Write  to  the  Crane  Manufacturing  Company,  dating  your  letter  ten 
days  after  the  date  used  in  Example  5.  Make  your  letter  include  all  the  essential  facts 
contained  in  the  following  data : 

(1)  Acknowledge  receipt  of  the  goods  ordered  in  Example  5  together  with  invoice. 

(2)  Explain  that  they  have  billed  and  shipped  you  a  No.  7  family  range  that  was 
not  included  in  your  order. 

(3)  State  that  you  are  inclosing  a  bank  draft  for  the  amount  of  the  invoice,  $  265.75, 
less  the  invoice  price  of  the  article  not  ordered,  $41.50,  and  less  the  4%  discount 
allowed  by  the  terms  of  the  invoice  for  payment  within  ten  days. 

(4)  Ask  what  disposition  they  desire  you  to  make  of  the  article  that  was  not  ordered. 


LESSON    XXXIII 
OPENING    AND    CLOSING   ACCOUNTS 

The  following  examples  afford  practice  in  opening  and  closing  sets  of  transactions. 
Each  presents  in  complete  form  the  results  of  one  or  more  years'  business. 

The  most  difThcult  part  of  bookkeeping  is  found  in  the  opening  and  closing  of  sets  of 
books.  These  exercises  omit  the  details  of  the  business  that  are  but  a  varied  repetition, 
and  bring  the  important  parts  close  enough  together  to  illustrate  clearly  the  relation 
each  bears  to  the  other. 

The  student  will  journalize,  post,  take  a  trial  balance,  make  balance  sheet,  and  close 
the  ledger  according  to  the  provisions  of  each  exercise.  When  no  dates  are  given,  use 
the  first  business  day  of  the  year  for  the  opening  entries  and  the  last  business  day  of 
the  year  for  the  closing  entries. 

Exa7)iple  1 

Losses  and  Gains  shared  equally.     Salary  Adjustment 

1.  VV.  F.  Barnes  and  R.  A.  Smith  commenced  business  with  the  following  resources  : 

Barnes  invested  cash  $3000. 

Smith  invested  merchandise  4000. 

Losses  and  gains  are  to  be  shared  equally.     It  is  agreed  that  salaries  shall  be  allowed 
as  follows:   Barnes  $90  per  month  and  Smith  $100  per  month. 

2.  Total  purchases  of  merchandise  on  account  for  the  year  amounted  to  $15,000. 

3.  Total  sales  for  the  year  amounted  to  $18,000,  one  half  on  account,  the  remainder 
for  cash. 

4.  Total  expenses  for  the  year  paid  in  cash,  not  including  salaries  of  partners, 
amounted  to  $2500. 

5.  All  the  accounts  receivable  were  paid  in  cash  less  an  average  cash  discount  of 
2  per  cent. 

6.  One  half  of  the  accounts  payable  were  paid  in  cash  less  an  average  cash  discount 
of  Ig-  per  cent. 

7.  Credit  each  partner  with  salary  for  one  year. 

8.  One  half  of  each  partner's  salary  was  paid.  Barnes  took  merchandise  from  the 
store  and  Smith  was  paid  in  cash. 

9.  The  inventories  are  as  follows : 

Merchandise  $6500. 

Expense  175. 

95 


9(J  BOOKKEEPING 

Example  2 
Losses  atid  Gains  shared  in  Proportion  to  Capital 

1.  R.  W.  Miller  and  H.  B.  Brown  commenced  business  with  the  following  resources 
and  liabilities : 

2.  R.  W.  Miller  invested  as  follows : 

Cash  •                          1^2100. 

A  note  signed  by  O.  B.  Grow,  due  in  60  days  800. 

An  account  against  Fair  &  Co.  for  475. 

A  balance  due  A.  B.  James  on  account  375, 

3.  H.  B.  Brown  invested  as  follows: 

A  store  building  and  lot  valued  at  $6000. 

There  was  a  mortgage  against  the  above  which  was  assumed 

by  the  firm  amounting  to  2500. 

4.  According  to  the  articles  of  copartnership  the  losses  and  gains  were  to  be  shared 
in  proportion  to  the  net  investments  of  the  partners. 

5.  The    total    purchases    of  merchandise  for   the  year  on   account  amounted  to 
$12,000. 

6.  The  total  sales  of  merchandise  for  the  year  on  account  amounted  to  $17,500. 

7.  The  total  expenses  for  the  year,  all  paid  in  cash,  amounted  to  $1350. 

8.  Three  fourths  of  the  accounts  receivable  were  paid  in  cash  less  an  average  cash 
discount  of  2^  per  cent. 

9.  One  half  of  the  accounts  payable  were  paid  in  cash  less  an  average  cash  dis- 
count of  1|  per  cent. 

10.  Paid  cash  for  new  elevator  in  building  $  200. 

11.  Inventories  at  end  of  year  : 

Real  Estate  $6200. 

Merchandise  3000: 

No  allowances  were  made  for  discount  on  the  note  invested  by  Mr.  Miller  or  for 
interest  accrued  on  the  mortgage  assumed  by  the  firm. 

Close  the  accounts  and  distribute  the  net  loss  or  the  net  gain. 

Example  3 

Interest  Adjj/st?nents  on  Investments 

1.    E.  L.  Coe  and  M.  F.  Scofield  commenced  the  retail  grocery  business  Jan.  1, 
19 — .     Their  investments  and  withdrawals  were  as  follows  : 
E.  L.  Coe : 

On  Jan.  1  invested  $  1500. 

On  Mar.  1  withdrew  500. 

On  July  1  invested  2000. 

On  Nov.  1  withdrew  300. 


OPENING   AND  CLOSING   ACCOUNTS  97 

M.  F.  Scofield  : 

On  Jan.  1  invested  ;^3000. 

On  Apr.  1  withdrew  800. 

On  Aug.  1  withdrew  200. 

The  above  were  all  cash  items. 

2.  Each  partner  was  credited  with  interest  on  all  investments  at  the  rate  of  5  %, 
and  was  charged  with  interest  at  the  rate  of  6  %  on  all  withdrawals. 

3.  Total  purchases  for  the  year,  one  half  on  account  and  one  half  for  cash,  amounted 
to  $  14,000. 

4.  Total  freight  charges  paid  in  cash  amounted  to  $  320. 

5.  Total  sales  for  the  year  amounted  to  $21,000,  one  quarter  being  on  account  and 
the  balance  for  cash. 

6.  Each  partner  was  credited  with  a  salary  of  $  100  per  month.  This  was  promptly 
drawn  out  on  the  date  of  credit,  i.e.  the  end  of  the  month.     (No  interest.) 

7.  Total  expenses  for  the  year  paid  in  cash  $  IGOO. 

8.  Inventories  at  the  end  of  the  year : 

Merchandise  $  3250. 

Expense  250. 

9.  Losses  and  gains  were  to  be  shared  equally. 

10.    Find  each    partner's    present  worth  as  of  Dec.  31,  19 — ,  the  business  having 
been  in  operation  for  one  year. 

Example  4 

Admitting  a  Partner 

1.  A.  A.  Brewer  started  in  business  Jan.  1, 19 —  with  an  investment  of  $  7500  in  cash. 

2.  The  total  purchases  for  the  year  amounted  to  $  17,500,  one  half  for  notes  and 
one  half  on  account. 

3.  The  total  sales  for  the  year  amounted  to  $  16,750,  one  half  for  cash  and  one 
half  on  account. 

4.  The  total  expenses  for  the  year,  amounting  to  $  1350,  were  paid  in  cash. 

5.  Three  fourths  of  the  accounts  receivable  were  paid  in  cash  less  an  average 
cash  discount  of  2^  %. 

6.  One  half  of  the  accounts  payable  were  paid  in  cash  less  an  average  cash  dis- 
count of  2  %. 

7.  Dec.  31,  19 — ,  Mr.  Brewer  offered  a  half  interest  in  the  business  to  H.  B. 
White,  for  a  cash  investment  equal  to  the  present  worth  of  the  business.  It  will  be 
necessary  for  you  to  close  the  books  to  determine  this  amount.  It  was  agreed  that  the 
accounts  receivable  pass  at  their  face  values  and  that  no  account  should  be  taken  of 
any  interest. 

The  inventories  were : 

Merchandise  $  5250. 

Expense  250. 


98  BOOKKEEPING 

8.  H.  B.  White  invested  cash  as  agreed. 

Summary  of  business  for  the  following  year : 

9.  Paid  all  notes  payable  in  cash  and  also  interest  due  on  the  same,  $  25.60. 

10.  The  total  purchases  for  the  year  amounted  to  $  23,000,  one  half  paid  in  cash 
and  the  balance  on  account. 

11.  The  total  sales  for  the  year  amounted  to  $  23,125,  one  half  for  cash,  and  notes 
for  the  balance. 

12.  The  total  expenses  for  the  year,  paid  in  cash,  amounted  to  $  1900. 

13.  The  old  balances  of  accounts  receivable  were  paid  in  cash. 

14.  The  inventories  were  : 

Merchandise  $  9150. 

Expense  315. 

15.  An  expense  item  of  ;^120  purchased  on  account  had  not  been  entered  on  the 
books. 

16.  Partners  shared  losses  or  gains  equally. 

Exatnple   5 
Buying  out  a  Partner 

1.  Jan.  1,  19 — ,  B.   Cerveny  and    W.  A.  Wheeler  engaged    in  business  with   the 
following  resources  and  liabilities  : 

Cerveny's  investment : 

Cash  $  2500. 

Merchandise  3000. 

Real  Estate  4000. 

There  was  mortgage  on  the  real  estate  amounting  to  $  2500,  which  was  assumed  by 
the  firm. 

Wheeler's  investment : 

Bills  receivable  $  3000. 

Furniture  and  Fixtures  1000. 

The  notes  were  guaranteed  by  Mr.  Wheeler. 

Losses  and  gains  were  to  be  shared  in  proportion  to  investments. 

2.  The  total  purchases  on  account  for  the  year  amounted  to  $19,500. 

3.  The  total  sales  for  the  year  amounted  to  $  21,000,  one  half  on  account  and 
the  balance  for  cash. 

4.  The  total  expenses  for  the  year  paid  in  cash  amounted  to  $  1500. 

5.  One  of  the  notes  invested  by  Mr.  Wheeler  amounting  to  $1400  was  found  to 
be  worthless  and  it  was  charged  to  him. 

6.  The  balance  of  the  bills  receivable  account  and  interest  due  on  notes  amounting 
to  $  24.50  were  paid  in  cash. 


OPENING   AND   CLOSING   ACCOUNTS  99 

7.  Dec.  31,  19 — ,  Mr.  Wheeler,  desiring  to  sell  out,  offered  his  interest  to  Mr. 
Cerveny  for  cash.  The  accounts  receivable  were  to  be  taken  at  their  book  values,  but 
in  determining  the  amount  to  be  paid  to  Mr.  Wheeler,  it  was  proposed  to  deduct  2  % 
from  the  present  worth  of  his  interest.     Mr.  Cerveny  accepted  the  proposition. 

The  inventories  were : 

Merchandise  $  7650. 

Expense  320. 

Real  Estate  ;^4000. 

Less  Mortgage  2500.            1500. 

Furniture  and  Fixtures  1000. 

8.  Paid  cash  to  Mr.  Wheeler  according  to  the  agreement.  This  cash  was  taken 
out  of  the' business. 

Summary  of  the  business  for  the  following  year : 

9.  The  total  purchases  for  the  year  amounted  to  $  18,500,  one  half  on  account 
and  the  balance  for  notes. 

10.  The  total  sales  for  the  year  amounted  to  $  31,000,  one  half  for  cash  and  the 
balance  on  account. 

11.  The  total  expenses  for  the  year  paid  in  cash  amounted  to  $  1850. 

12.  Withdrawals  of  cash  by  the  proprietor  amounted  to  $  2150. 

13.  One  half  of  the  old  balance  of  accounts  receivable  and  three  fourths  of  the  sales 
on  account  were  paid  in  cash. 

14.  The  old  balance  of  accounts  payable  was  paid  in  cash. 

15.  Inventories  at  the  close  of  the  year  were : 

Merchandise  $  3600. 

Expense  220. 

Real  Estate  $  3900. 

Less  Mortgage  2500.             1400. 

Furniture  and  Fixtures  950. 


LESSON    XXXIV 
SINGLE  ENTRY   BOOKKEEPING 

Single  Entry  Bookkeeping  is  a  method  of  recording  business  transactions  in  such  a 
manner  as  to  determine  the  condition  of  the  personal  accounts.  This  purpose  it  accom- 
plishes as  satisfactorily  as  double  entry,  if  we  disregard  the  advantages  of  the  latter  in 
the  detection  of  errors.  It  is  evident  from  the  purpose  of  the  method  that  the  law  of 
equality  of  debits  and  credits,  as  found  in  double  entry,  can  have  no  place  in  single  entry, 
and  that  the  checks  upon  the  work  provided  by  this  law  are  lacking. 

It  is  obvious  that  the  resources  and  liabilities  of  a  business  whose  records  are  kept 
by  the  methods  of  single  entry  can  be  determined,  and  from  these  facts  it  is  possible  to 
find  the  net  capital  or  present  worth.  Also  it  is  clear  that  the  difference  between  the 
net  capitals  at  two  dates  in  the  history  of  the  business  is  the  net  gain  or  net  loss  for  the 
intervening  period,  provided  allowances  are  made  for  additional  investments  and  for  with- 
drawals of  capital  from  the  business. 

It  should,  however,  be  explained  that  all  information  required  for  determining  the 
resources  is  not  necessarily  found  in  the  records  of  the  business  and  may  have  to  be 
obtained  from  other  sources.  For  example,  if  the  day  book  alone  is  used  for  original 
records,  and  no  cash  account  is  kept,  the  amount  of  cash  on  hand  can  be  found  only  by 
actually  counting  it ;  and  the  total  of  the  notes  on  hand  can  be  found  only  by  adding 
the  values  of  those  in  possession  of  the  business.  Since  the  notes  outstanding  cannot 
readily  be  determined  in  any  other  way,  it  is  customary  to  keep  a  record  of  them  in  a 
notes  payable  book.  The  value  of  merchandise  and  other  property  must,  of  course,  be 
determined  as  in  double  entry. 

The  great  weakness  of  the  single  entry  method  appears  when  it  is  desired  to  find 
where  the  gains  and  losses  of  a  business  occur.  One  department  of  a  business  may  be 
pleasingly  profitable,  while  another  may  be  a  source  of  loss,  but  the  single  entry  method 
is  inadequate  to  discover  either  of  these  facts. 

Among  other  defects  of  the  single  entry  method  are  the  following : 

Trial  balances  in  the  double  entry  sense  are  impossible. 

The  accounts  giving  rise  to  the  losses  and  gains  of  the  business  are  not  found  in  the 
ledger. 

The  discovery  of  an  omission  of  a  debit  or  a  credit  item  from  the  ledger  is  accidental 
and  not  due  to  any  merit  of  the  method. 

BOOKS   USED   IN   SINGLE   ENTRY 

As  in  double  entry,  the  number  of  books  used  and  the  nature  of  records  made  in  them 
depend  upon  the  requirements  of  the  business.  It  should,  however,  be  remembered 
that  the  books  selected  in  single  entry  are  those  that  most  readily  lend  themselves  to 

100 


SINGLE   ENTRY  BOOKKEEPING  101 

determining  the  condition  of  the  personal  accounts.     Below  are  a  few  of  the  combinations 
found  in  common  use. 

I.  But  one  book  of  record  may  be  used.  This  is  a  form  of  ledger  with  sufficient 
space  on  both  sides  for  explanations.  For  particular  lines  of  business  this  form  of  record 
is  admirably  adapted.  Although  the  history  of  accounting  fails  to  give  positive  infor- 
mation upon  this  point,  it  is  generally  believed  that  the  first  systematic  records  of  trans- 
actions were  of  this  form. 

II.  A  very  common  form  of  single  entry  is  that  in  which  the  day  book  and  ledger 
are  used.  The  original  records  are  made  in  the  day  book.  Generally,  only  those  trans- 
actions that  affect  personal  accounts  are  recorded.  But  the  day  book  may  contain  a 
full  record  of  all  transactions.  It  is  necessary  in  posting  to  discriminate  between  those 
affecting  personal  accounts  and  others. 

III.  Frequently  the  cash  book  is  added  to  those  just  described.  It  may  contain  a 
record  of  receipts  and  payments,  none  of  which  are  carried  to  the  ledger;  in  this  case  it 
is  an  auxiliary  book.  It  may  be  used  in  such  manner  that  cash  items  affecting  personal 
accounts  are  transferred  from  it  to  the  ledger.  In  the  former  case,  the  day  book  would 
necessarily  contain  a  record  of  all  cash  items  to  be  carried  to  the  ledger  ;  in  the  latter  case, 
all  cash  items  may  be  omitted  from  the  day  book. 

Other  Books.  —  All  the  books  used  in  double  entry  except  the  journal  may  be  used  in 
single  entry.  The  cash  book,  the  sales  book,  and  the  invoice  book  are  subdivisions  of  the 
day  book  in  either  case.  Notes  receivable  and  notes  payable  books  are  frequently  used. 
It  should  be  kept  in  mind  that  single  entry  concerns  itself  with  personal  accounts,  and 
that  the  introduction  of  additional  books  is  not  for  the  purpose  of  more  readily  obtaining 
detailed  information  concerning  any  impersonal  account.  They  are  used  either  for  refer- 
ence or  as  a  matter  of  convenience  in  keeping  records  of  one  kind  of  transactions  in  a 
separate  book. 

Sometimes  purely  impersonal  accounts  are  kept  in  single  entry,  but  to  this  extent  the 
system  encroaches  upon  the  methods  of  double  entry  bookkeeping. 

SINGLE   ENTRY.     SET    I 

In  recording  the  transactions  of  this  set  you  will  use  a  day  book,  a  cash  book,  and 
a  ledger. 

The  day  book  will  contain  a  complete  record  of  all  transactions  that  affect  personal 
accounts.  The  cash  book  will  contain  a  record  of  all  receipts  and  payments  of  cash. 
These  are  the  books  of  original  entry,  and  they  should  contain  records  so  complete  and 
clear  that  a  full  history  of  the  business  is  revealed  by  them.  The  cash  book  here  has 
the  same  rulings  as  in  the  double  entry  sets,  but  the  receipts  and  the  payments  will  be 
entered  on  the  same  page.  Since  no  book  corresponding  to  the  journal  of  double  entry 
is  used,  it  is  convenient  to  indicate  in  the  day  book  entry  whether  a  personal  account  is 
to  be  credited  or  debited.  The  forms  of  the  day  book  and  the  cash  book  as  given  illus- 
trate how  entries  are  made.  The  rules  for  determining  when  a  personal  account  must 
be  credited  and  when  debited  apply  to  single  as  well  as  to  double  entry. 


102 


BOOKKEEPING 


The  ledger  used  here  has  the  same  ruhngs  as  the  day  book.     The  left  amount  col- 
umn contains  the  charges,  and  the  right  amount  column  the  credits,  of  personal  accounts. 


19— 


d/tj^i'-t/-   (cfo-aS 


Oct. 


10 


11 


11 


12 


13 


15 


SO 


John  Phillips  commenced  the  business  of  repairing 
and  dealing  in  automobile  tires  at  1620  Park  St. 
He  invested  cash  $  1500. 

John  Phillips  Cr. 


Union  Mfg.  Co. 
Vulcanizing  outfit 


Union  Mfg.  Co. 

Cash  in  part  payment  of  above 


J.  Ames  ^  Son 

Fabric  as  per  invoice 


W.  M.  Davis,  1785  Park  St. 
2  sections  in  casing  @  $  ^.25 


Harold  Steiner,  Jf20  Green  St. 
Rebuilding  casing,  32  X  4 


T.  M.  Fischer  &=  Co. 
Lathe  ajut  motor 


J.  P.  Sand 
Automobile 


J.  P.  Sand 

Cash  ill  part  payment  of  above 


Central  Garage,  16j^5  York  Ave., 
Repairing  8  inner  tubes  (a)  $  .75 
Repairing  6  casings  @  $4-50 

Less  15  % 


y.  Ames  6^  Son 

Cash  for  invoice  of  the  3d  inst. 


John  Gray,  562  Elm  Ave. 

Retreading  2  36  X  4\  casitigs  @  $18.25 


R.  J.  Raymond,  1524  East  Ave. 
Allowance  for  defect  in  casing 
Cash  for  balance  of  account 


Cr. 


Df 


Cr. 


Dr. 


Dr. 


Cr. 


Cr. 


Dr. 


Dr. 


D> 


Dr. 


Cr. 


6 
27 
33 

4 


10 

43 


95 


1500 

620 
120 

113 
8 

24 
125 
450 
300 


28 


113 


36 


53 


55 


50 


50 


05 


55 


50 


SINGLE   ENTRY   BOOKKEEPING  103 


19— 


Oct. 

1 

John  Phillips  i?ivestment 

1500 

1 

a 

1 

Rent  of  store  1  jno.  in  advance 

40 

ii 

2 

Sheet  rubber,  60  lb.  @  $1.12^^ 

76 

50 

n 

2 

Benzine,  5  gal.  @  $  .22 

1 

10 

til 

2 

Union  Mfg.  Co.  o?i  acct. 

120 

■(( 

3 

Tools  as  per  bill 

28 

70 

4 
6 

Repairs,  4  tubes  @,$1.25 

Bala /ice  (To  be  ejitered  in  red  ink) 

Balance 

5 

150  5 

1247 

30 

70 

1505 

1505 

Oct. 

8 

1247 

70 

Required  of  the  Student. — Write  up  the  transactions  of  Set  I  in  the  day  book  and 
the  cash  book.  Then  post  the  day  book  entries.  The  posting  here  is  so  similar  to  the 
posting  in  double  entry,  ^o  far  as  the  personal  accounts  are  concerned,  that  you  should 
have  no  difficulty.  Postmark  postings  as  in  double  entry.  Several  items  have  been 
posted  to  show  the  form  of  the  accounts.  Balance  and  rule  up  the  cash  book  on  the 
6th,  13th,  20th,  27th,  and  31st  of  the  month. 

TRANSACTIONS 

•Oct.  1,  19 — ,     John    Phillips   commenced   the   business    of  repairing   and   dealing   in 
automobile  tires  at  1620  Park  St.     He  invested  cash  $  1500. 


19— 


Ji^j 


o-H.<n^ 


PERSONAL   ACCOUNTS 


/Qi.       ^. 


Oct.     1 


Investment 


Oct. 


Paid  rent  of  shop  for  1  month  in  advance  ^40, 
Paid  cash  for  60  lb.  sheet  rubber  at  $  1.12|^. 
Paid  cash  for  5  gal.  benzine  at  $  .22. 

Bought  from  the  Union  Manufacturing  Co.  a  vulcanizing  outfit  $  620. 
cash  $  120,  balance  on  account. 


19— 


\/6n^i^an^   C/l^/i^.    ^4^0-. 


1500 


Paid 


Oct. 


Vulcanizing  outfit 
Cash 


120 


620 


104  BOOKKEEPING 

Oct.    3.     Bought  from  J.  Ames  &  Son  on  account  per  invoice  62  lb.  fabric  at  $  .90, 
55  lb.  fabric  at  $  1.05. 

3.  Paid  cash  for  tools  as  per  bill  $  28.70. 

4.  Repaired  4  inner  tubes  at  $  1.25,  received  cash  for  same. 

5.  Put  2  sections  in  casing  for  W.  M.  Davis,  1785  Park  St.,  at  ^4.25  on  account. 

6.  Rebuilt  a  32  x  4  casing  for  Harold  Steiner,  420  Green  St.,  $  24.50. 

8.  Made  sundry  repairs  for  cash  amounting  to  $  7.65. 

9.  Paid  Union  Manufacturing  Co.  cash  on  account  $  100. 

10.  Bought  a  lathe  and  motor  from  T.  M.  Fischer  &  Co.  on  account  $  125. 

11.  Bought  a  second-hand  automobile  for  delivering  work  from  J.  P.  Sand  for 
$450,  paid  him  cash  $300,  balance  on  account. 

12.  Repaired  for  Central  Garage,  1645  York  Ave.,  on  account, 
8  inner  tubes  at  $    .75 
6  casings         at  4.50 

Allowed  a  commission  of  15  %  on  bill. 

13.  Paid  J.  Ames  &  Son  for  purchase  of  the  3d  inst. 

15.  Retreaded  2  36  x  41  casings  for  John  Gray,  562  Elm  Ave.,  at  $  18.25,  which 
was  charged  to  his  account. 

16.  Bought  from  J.  Ames  &  Son  materials  as  per  invoice  $  222.50. 

16.  Hired  Frank  Jones  to  assist  in  shop  and  to  deliver  work  at  $  15  per  week. 

17.  Made  repairs  for  cash  amounting  to  $  16.50. 

18.  Repaired  for  Central  Garage  on  account, 
8  inner  tubes  at         $      .75 
6  inner  tubes  at  1.25 
5  casings  (rebuilt)  at            23.50 

Allowed  a  commission  of  15  %  on  above. 

19.  Received  from  Central  Garage  cash  for  bill  of  the  12th  inst. 

20.  Paid  Frank  Jones  for  3  days'  work  $  7.50. 

22.  Bought  for  cash  16  second-hand  casings  at  $  7.40. 

23.  Sold  R.  J.  Raymond,  1524  East  Ave.,  on  account  4  second-hand  casings  at 
$  13.25. 

24.  Paid  Union  Mfg.  Co.  on  account  cash  $  200. 

25.  Received  bill  from  Lewis  Clark  for  printing  $7.30,  paid  cash  for  same. 

25.  Rebuilt  for  John  Gray,  562  Elm  St.,  2  34  x  5  casings  at  $27.50.     Received 
from  him  cash  on  account  $  50. 

26.  Paid  J.  Ames  &  Son  on  account  $  150. 

27.  Paid  Frank  Jones  cash  $  7.50  and  gave  him  credit  for  balance  due  on  week's 
wages  $  7.50. 

29,  Made  repairs  for  cash  $  29.75. 

30,  Allowed   R.  J.  Raymond  a  rebate  of  $10  on  his  purchase  of  the  23d  because 
of  defects  in  one  casing.     He  paid  cash  for  balance  of  his  account. 

31,  Credited  Central  Garage  for  oil  and  gasoline  received  during  month  as  per 
bill  $  9.60. 


SINGLE   ENTRY   BOOKKEEPING  105 

Oct.  31.     John  Phillips,  Prop.,  withdrew  cash  from  business  for  personal  expenses  $100. 

Inventory  : 

Materials  $300. 

Equipment  (Vulcanizing  outfit,  tools,  motor,  and  lathe)  750. 

Automobile  440. 

Second-hand  Casings  88.40 

After  completing  work  as  instructed,  make  a  statement  to  show  the  resources  and 
the  Habilities  of  the  business  as  well  as  the  net  gain  or  net  loss.  The  information  ob- 
tainable from  your  books  together  with  the  inventory  of  property  on  hand  should  en- 
able you  to  determine  the  resources  and  liabihties.  This  statement,  as  far  as  it  goes,  is 
like  those  you  made  for  the  double  entry  sets.  The  only  method  of  discovering  whether 
there  is  a  gain  or  a  loss  consists  of  a  comparison  of  the  present  worth  with  the  pro- 
prietor's net  investment. 

QUESTIONS 

1.  If  the  present  worth  is  just  equal  to  the  net  investment,  what  conclusion  will  you 
draw  .? 

2.  If  the  present  worth  is  greater  than  the  net  investment,  how  can  the  increase  be 
accounted  for  .-* 

3.  If  the  present  worth  is  less  than  the  net  investment,  how  can  the  decrease  be 
accounted  for .-' 

4.  Does  single  entry  bookkeeping  seem  satisfactory  for  a  business  giving  rise  to 
transactions  similar  to  those  of  this  set .'' 

5.  If  the  proprietor  wished  to  know  the  total  cost  of  materials  used,  would  he  have 
.much  difficulty  in  determining  it.-'     Why  .-* 

6.  If  you  should  be  required  to  work  out  this  set  by  the  methods  of  double  entry, 
and  were  allowed  entire  freedom  as  to  books,  what  books  of  original  entry  would  you 
select .'' 

7.  Would  you  open  a  merchandise  account .''     Why  .-' 

8.  Would  a  sales  book  be  of  much  use  ?  What  book  would  you  suggest  to  take  its 
place .'' 

INSTRUCTIONS   FOR   DOUBLE   ENTRY 

Unless  otherwise  instructed  by  your  teacher,  you  will  work  out  the  above  set  by  the 
methods  of  double  entry.  The  inventory  as  given  at  the  end  of  the  transactions  should 
suggest  some  of  the  impersonal  accounts  that  should  be  opened.  It  is  suggested  that 
you  open  a  repair  account.  For  original  entries  you  will  use  the  day-book  journal, 
the  cash  book,  and  a  repair  book.  The  last  may  be  used  in  the  same  manner  as  the 
sales  book  in  previous  sets.  Only  those  repairs  that  are  charged  to  the  personal  ac- 
counts will  be  entered  into  this  book.  The  cash  book  and  day-book  journal  will  be 
used  as  in  previous  sets. 

Compare  the  results  obtained  by  the  methods  of  single  and  double  entry.  Find  as 
many  points  of  similarity  and  of  difference  as  possible. 


106  BOOKKEEPING 

SINGLE  ENTRY.     SET   II 

The  transactions  used  in  this  set  are  those  of  Set  III,  double  entry,  page  39. 

The  day  book  will  contain  a  record  of  all  transactions  affecting  personal  accounts 
except  cash  received  and  paid.  The  same  form  of  ledger  will  be  used  as  in  the  double 
entry  sets.  There  is  not  necessarily  any  difference  in  the  form  of  ledger  used  in  single 
entry  and  double  entry. 

If  the  bill  book  is  used,  it  will  be  similar  to  the  form  illustrated  on  pages  62-63. 

The  cash  book  will  be  of  the  same  form  as  in  the  first  set  of  single  entry ;  but  since 
no  cash  will  now  be  entered  into  the  day  book,  those  receipts  and  payments  affecting 
personal  accounts  must  be  posted  from  the  cash  book. 

With  the  exception  of  the  modification  noted  above,  the  day  book  here  will  be  like 
that  in  the  previous  set.     You  may  use  loose  paper  for  this  book. 

After  having  worked  this  set  as  directed  you  should,  with  the  aid  of  a  few  sugges- 
tions, be  able  to  make  changes  necessary  to  convert  a  set  of  double  entry  books  to  single 
entry  and  vice  versa. 


PART    II 


BUSINESS    PRACTICE 

In  recording  transactions  —  that  is,  in  making  bookkeeping  entries  —  follow  the 
same  general  methods  here  that  were  used  in  Part  I  of  this  book.  The  use  of  addi- 
tional books  will  be  found  convenient,  and  their  use  will  be  explained  as  they  are  in- 
troduced. Except  in  transactions  where  you  are  otherwise  instructed,  make  the  entries 
so  that  the  personal  accounts  will  contain  complete  records. 

In  this  part  of  the  work  you  will  be  required  to  write  or  fill  out  a  variety  of  papers 
known  by  the  general  term  "business  forms."  You  will  also  receive  similar  forms 
made  out  by  those  with  whom  you  transact  business.  These  two  sets  of  papers  will 
constitute  the  evidence  of  business  transacted.  The  papers  made  out  by  you  will  be 
referred  to  as  "  outgoing  papers  "  ;  those  already  filled  out  when  you  receive  them  are 
"  incoming  papers." 

As  a  rule,  the  transactions  in  the  book  would  not  be  intelligible  without  the  papers 
provided  to  accompany  them.  The  transactions  and  the  incoming  papers  bear  the  same 
numbers.  A  large  part  of  your  work  will  consist  in  making  out  papers  and  filing  them 
for  future  reference.  Filing  is  any  systematic  arrangement  of  papers  ;  there  are  various 
systems.  Several  methods  are  suggested  below  that  will  answer  your  purpose.  Be 
sure  that  the  plan  you  follow  enables  you  to  find  any  particular  paper  quickly. 

In  this  part  of  the  course  you  will  also  keep  the  books  and  attend  to  the  general  office 
work  of  the  business.  According  to  your  agreement  with  the  proprietor  you  will  receive 
a  salary  of  $15.00  per  week. 

It  will  frequently  be  necessary  for  you  to  sign  the  proprietor's  name  to  papers  of 
various  kinds.  You  will  assume  that  the  proprietor  has  given  you  authority  to  do  this 
whenever  the  requirements  of  the  business  demand  it.  But  in  all  cases  where  you  sign 
his  name,  follow  it  with  your  name  as  in  the  form  below : 

B.  J.  Knoiiss 

By  {Your  Name). 
METHODS  OF   FILING 

Envelopes  are  provided  in  your  outfit  for  taking  care  of  all  papers  you  handle.  The 
printed  instructions  on  the  outside  explain  what  is  to  be  filed  in  each.  The  incoming 
papers  should  be  placed  in  the  proper  envelopes  and  arranged  in  the  order  in  which 
they  are  received. 

All  outgoing  papers  may  be  placed  in  one  envelope.  Either  file  all  the  papers  in 
the  order  in  which  they  are  received,  which  will  keep  the  papers  belonging  to  the  same 
transaction  together,  or  file  all  the  papers  of  one  class  by  themselves,  which  will  enable 
you  to  find  any  particular  paper  more  quickly.  Be  sure  in  either  case  that  the  filing  is 
done  carefully. 

107 


108 


BOOKKEEPING 


If  offices  are  conducted  in  connection  with  your  work,  all  outgoing  papers  will  be 
delivered  to  the  proper  office  and  will  there  be  filed  among  incoming  papers.  The  dis- 
position of  incoming  papers  will  not  be  affected  by  the  use  of  offices. 

The  incoming  papers,  with  the  exception  of  two  which  you  will  find  separately 
in  your  outfit,  are  arranged  for  convenience  in  three  pads.  If  offices  are  conducted,  pads 
No.  1  and  No.  2  will  be  placed  in  the  proper  office  and  you  will  receive  papers  properly 
initialed  as  you  need  them.  If  no  offices  are  conducted,  these  pads  will  remain  in  your 
possession  and  you  will  remove  the  leaves  from  them  as  they  are  required  by  the  work. 
Never  remove  a  paper  from  a  pad  until  you  have  performed  your  part  of  the  transaction. 

Whether  you  file  the  outgoing  papers  or  give  them  to  offices,  always  have  them 
inspected  and  approved  by  your  teacher,  or  by  some  one  appointed  for  the  purpose, 
before  you  dispose  of  them.  It  is  impossible  to  emphasize  too  strongly  the  need  of 
constant  care  in  the  preparation  of  these  papers.  Always  inspect  your  own  papers 
before  you  present  them  for  approval.  Make  your  bookkeeping  records  before  dis- 
posing of  papers. 

TRANSACTIONS 

1 
Jan.  2,  19 — .  B.  J.  Knouss  began  business  as  a  dealer   in    groceries,    locating   at 
125  Madison  Street,  Chicago,  with  the  following  assets : 

Cash  (check  $  2400,  currency  $  100)  $  2500. 

Mdse.  as  per  inventory  from  former  business  2000. 

Horse  and  wagon  350. 

Safe  100. 

Blank  books  and  supplies  25. 

Total  investment  $4975. 

You  will  find  check  and  currency  for  this  transaction  in  Pad  No.  1. 
Bookkeeping.  —  Make  the  following  record  in  your  journal : 


/f  - 


J2. 


BUSINESS   PRACTICE 


100 


The  foregoing  is  a  memorandum  entry.     No  debits  or  credits  have  been  entered. 
As  the  preceding  items  are  entered  in  the  cash  book  and  the  day-book  journal, 
use  (^')  marks  to  show  that  the  entries  have  been  transferred  to  other  books. 
Enter  the  investment  of  cash  in  the  cash  book  on  the  debit  side,  thus : 


^^. 


(9i:Uz<^7ycdj 


<::^^n^i/^€^C-ff■y^t^■-7^ 


Enter  the  remaining  assets  in  the  journal  thus  : 


^y^ddJ^  ^c^n^^^id^£^. 


± 


506/ 


2 

3S  0 
25 

^ 

^7S 

Remove  check  and  currency  from  the  pad  and  place  in  the  cash  envelope. 


BANKERS  SCHOOL  BANK 


DEPOSITED   BY 


j3^ 


/-^at^dd 


^ 


^. 


19- 


Jan.  2.     Open  an  account  with  the  Bankers  School  Bank  of  Chicago  and  deposit 

the  check  for  $2400  which  the  proprietor 
invested  in  the  business.  In  indorsing  the 
check  use  a  blank  indorsement.  (For  forms 
of  indorsement,  see  Lesson  IV.) 

Practice. — The  proprietor  will  introduce 
you  to  the  various  bank  officials  so  they  may 
be  informed  of  your  business  relations  to 
him  and  that  he  authorizes  you  to  sign  checks. 
He  records  this  information  with  the  bank. 
You  will  be  requested  to  sign  the  proprietor's 
name  and  your  own  name  in  the  bank  signa- 
ture book  or  on  a  card.  This  is  for  compari- 
son when  a  check  drawn  by  you  is  presented 
for  payment. 

Now  fill  out  a  deposit  ticket,  following  the 
accompanying  form,  and  hand  it  to  the  receiv- 
ing teller,  together  with  the  check.  He  will 
enter  the  deposit  in  a  small  book  known  as  a 
pass  book.     This  book  will  be  handed  to  you. 


Currency 

Coin 

Total  Checks  and  Drafts. 


List  Checks  and  Drafts  - 


2JfiO 


24.00 


no 


BOOKKEEPING 


It  is  your  receipt  from  the  bank  for  the  deposit.  Take  this  book  with  you  whenever  a 
deposit  is  made.  At  stated  intervals,  generally  once  a  month,  the  book  will  be  balanced 
and  the  checks  you  have  drawn,  properly  canceled,  will  be  returned  to  you.  (You 
make  no  entries  in  the  pass  book.)  Most  banks  keep  the  depositor's  account  showing 
daily  balances  on  a  loose  sheet  of  ledger  paper  specially  ruled.  This  is  given  to  the 
depositor  at  the  end  of  the  month,  together  with  the  canceled  checks.  The  depositor 
is  generally  requested  to  sign  a  receipt  for  the  returned  checks. 

In  the  pass  book  deposits  will  be  recorded  by  the  teller  on  the  debit  side  thus  : 


19— 
Jan. 


Deposit 


C 


2JfiO 


Note.  —  C  is  the  initial  of  the  receiving  teller. 

It  will  not  be  necessary  to  make  a  debit  and  credit  entry.  The  cash  deposited  still 
belongs  to  the  business.  Of  what  reasons  can  you  think  for  placing  it  in  the  bank  .'' 
Your  cash  book  balance  will  show  the  amount  of  cash  you  have  at  your  disposal.  This 
balance  will  include  the  amount  of  cash  on  hand  and  the  amount  in  the  bank. 

It  is,  however,  necessary  to  keep  a  record  of  the  money  that  you  place  in  the  bank 
as  well  as  the  amounts  you  order  the  bank  to  pay  out.  The  most  convenient  place  for 
doing  this  is  in  the  check  book.  Space  is  provided  for  this  purpose  at  the  left  of  the 
blank  checks.  You  will  enter  the  deposit  just  made  at  the  top  of  the  first  page  of  the 
check  book  in  the  money  column.     To  the  left  of  the  amount  write  Jan.  2,  19 — .  Dep. 


£-ia>iny:^,  /^  <KCU<^. 


o-2^y 


^^00 


-^ 


Many  business  firms  deposit  in  the  bank  all  money,  checks,  and  other  forms  of  cash 
received  and  make  all  payments  by  drawing  checks  on  the  bank.  This  is  the  safer  way 
and  prevents  many  mistakes.  However,  to  afford  practice  in  handling  currency,  you 
will  keep  a  small  amount  of  it  on  hand,  and  from  this  pay  small  bills. 

3 

Jan.  2.  Order  from  Gray  &  Farwell,  Chicago,  III,  the  following  bill  of  groceries, 
to  be  delivered  C.  O.  D. : 


BUSINESS   PRACTICE  IH 

48  lb.  Baker's  chocolate 
48  |-tins  Baker's  cocoa 
12  lb.  Black  pepper 
10  bx.  Cal.  raisins 
10  bx.  Cal.  prunes 

3  bbl.  Oatmeal 

5  bx.  Sanitary  toilet  soap 
10  bx.  Excelsior  laundry  soap. 

Practice.  — Write  a  letter  (Refer  to  Lesson  XXXII)  for  the  above  order.  No  debit 
or  credit  entry  is  to  be  made  until  the  goods  and  a  bill  are  received.  Why  .•*  Address 
an  envelope  and  inclose  the  letter  properly  folded.  The  disposition  of  this  letter  is  to 
be  in  accordance  with  the  method  suggested  in  the  introduction  of  this  set. 

Note.  —  You  should  have  a  copy  of  every  important  letter  for  reference.  There  are  several  methods 
of  making  dupncates.  If  a  letter  press  is  included  in  your  school  equipment,  satisfactory  results  can  be 
obtained  with  it.  Since  typewriters  have  become  a  part  of  the  equipment  of  almost  every  business  office 
practically  all  duplicates  of  letters  are  made  on  them.  A  sheet  of  carbon  paper  will  enable  you  to  make 
duphcate  copies  for  this  work.  Which  of  these  methods  you  will  follow  must  be  determined  by  the  facilities 
at  your  disposal  and  the  instructions  of  your  teacher. 


Jan.  2.  The  proprietor  instructs  you  to  pay  the  premium  for  insurance  on  the 
merchandise  in  the  store.  The  bill  will  be  found  on  Pad  No.  2.  The  proprietor  has 
taken  charge  of  the  policy. 

Note.  — Most  of  the  payments  in  these  transactions  will  be  made  by  checks.  A  check  is  an  order  on 
a  bank  by  a  depositor  for  the  payment  of  money.  A  check  ordinarily  does  not  specify  in  payment  of  what 
items  or  bills  it  is  issued.  Your  checks,  however,  have  a  form  on  the  back  for  the  purpose  of  naming  spe- 
cifically what  is  paid  by  each  check.  When  the  check  is  returned  to  you  by  the  bank  it  will  contain  the 
payee's  indorsement,  which  will  be  your  receipt  that  the  items  named  have  been  paid.  This  is  one  form  of 
voucher  check.  Do  not  dispose  of  a  check  until  the  stub  has  been  properly  filled  out.  The  checks  should 
be  numbered  consecutively  and  the  numbers  on  a  check  and  its  stub  must  be  the  same.  Follow  the  model 
forms  in  writing  checks  and  filling  out  stubs. 


/  H/I4ROI1FTTF  Riui  niwrs    .     / 


MARQUETTE  BUILDING 


112  BOOKKEEPING 

Practice.  —  Write  a  check  for  the  amount  of  the  bill.  Make  it  in  favor  of  the  firm 
by  whom  the  bill  is  presented.  In  the  form  on  the  back  explain  in  payment  of  what  the 
check  is  issued. 

Bookkeeping.  —  Record  this  payment  on  the  credit  side  of  the  cash  book,  charging  the 
amount  to  Insurance.     Use  the  following  form  : 


G^u 


jU?>^  ^ 


■Ji^-'n-<d.^i.c4..<iz^in^c£^ 


(^U'-fi>z< /^t^yL<  i7?z//<%,z2^ 


7- 


File  the  check  and  the  bill. 

5 

Jan.  2.  Purchase  a  set  of  office  furniture  according  to  bill  No.  5.  (The  large  num- 
bers at  the  top  of  the  incoming  papers  correspond  with  the  numbers  of  the  transactions.) 

Practice.  —  You  will  find  the  bill  for  the  above  on  Pad  No.  2  of  incoming  papers.  It 
has  been  O.K.'d  by  the  proprietor.  What  does  this  indicate.''  It  is  also  receipted. 
It  should  not  be  removed  from  the  pad  until  a  check  to  meet  it  has  been  written. 

Write  out  a  check  for  the  amount  called  for  in  the  bill. 

Refer  to  Transaction  4  for  the  correct  method  of  filling  out  the  check  and  for  get- 
ting the  bank  balance.  You  should  show  the  bank  balance  after  the  drawing  of  each 
check ;  you  will  thus  never  make  the  mistake  of  overdrawing  your  bank  account. 
Carry  this  second  balance  to  the  top  of  page  2. 

Pile  the  bill  received  in  the  envelope  marked  "  Paid  Bills  and  Receipts." 

Bookkeeping.  —  Enter  on  the  credit  side  of  the  cash  book,  charging  the  expenditure 
to  Fixtures. 

•    6 

Jan.  2.  As  help  is  needed  in  conducting  the  business,  the  proprietor  hires  Allen 
Brown  as  salesman  at  $  12  per  week  and  James  Rooney  as  driver  and  helper  at  $  13 
per  week. 

Bookkeeping.  —  No  debit  or  credit  entry  is  required,  but  it  is  an  excellent  plan  to 
have  a  record  for  reference.  You  may  therefore  make  a  memorandum  entry  in  your 
journal,  that  is,  simply  a  statement  of  the  substance  of  the  agreement.  Do  not  extend 
amounts  into  the  money  column  ;  except  for  the  date,  use  the  wide  space  only.  Include 
in  this  entry  a  record  of  your  agreement  with  the  proprietor.     (See  introduction.) 

Note.  —  Write  up   this   memorandum  explanation   on   trial   paper  and  submit   it  to  the  teacher  for 
approval. 

7 

Jan.  2.  The  proprietor  rented  the  store  building  you  occupy  previous  to  Jan.  1, 
but  the  lease  was  not  delivered  until  to-day.     You  will  find  the  lease  in  your  outfit. 

Practice.  —  It  is  customary  to  make  two  copies  of  a  lease,  one  for  the  lessor  and  one 
for  the  lessee.  The  copy  you  receive  has  been  signed  by  both  parties,  and  you  may 
assume  that  the  other  also  has  been  signed.     Read  the  conditions  of  the  lease  carefully. 


BUSINESS    PRACTICE 


113 


Draw  a  check  for  the  first  month's  rent,  making  it  payable  to  the  agents  by  whom 
the  accompanying  receipt  is  signed.  Although  you  here  have  a  separate  receipt  (see 
Pad  No.  1),  you  will  fill  out  the  voucher  on  the  back  of  the  check. 

Bring  down  the  bank  balance  in  the  check  book. 

Bookkeeping.  —  Charge  this  payment  to  Expense. 
File  the  lease,  the  check,  and  the  receipt. 


Jan.  3.     Order  from  the  Union  Milling  Company,  Minneapolis,  Minn.,  the  follow- 
ing items,  asking  for  prompt  shipment : 

10  bbl.  Fancy  family  flour 
10  bbl.  ^'s  Fancy  family  flour 
15  bbl.  ^'s  Union  medal  flour 
20  bbl.  4's  Union  medal  flour. 


Practice.  —  Write  the  letter  for  the  above  order, 
as  previously  instructed.     See  Transaction  3. 
No  debit  or  credit  entry  is  required. 


Copy  the  letter  and  dispose  of  it 


Jan.  4.  You  will  receive  to-day  by  delivery  the  goods  ordered  the  2d  inst.,  together 
with  bill,  which  is  in  Pad  No.  2.     The  goods  are  according  to  bill  and  are  checked  on  it. 

Practice.  —  When  goods  are  received  they  are  checked  against  the  items  called  for 
on  the  invoice.  This  is  done  by  a  receiving  clerk,  after  which  the  goods  are  placed  in  the 
general  stock.  The  invoice  as  you  take  it  from  the  pad  shows  these  check  marks,  and 
the  O.K.  and  initials  of  the  proprietor.  It  will  be  your  duty  to  verify  the  extensions  on 
all  invoices. 

The  terms  are  C.O.D.  Write  a  check  for  the  purchase,  making  it  in  favor  of  the 
seller.     Bring  down  bank  balance. 

In  filling  out  the  voucher  say  "For  Inv.  No.  9, Jan.  3." 

Bookkeeping.  —  Since  it  is  desirable  that  the  ledger  accounts  show  all  of  the  dealings 
with  creditors  and  customers,  you  will  make  a  record  in  the  journal  as  follows: 


Jan. 


Mdse. 

For  Inv.  No.  9 


Gray  &"  Farwell 


181 


05 


Also  make  the  following  entry  on  the  credit  side  of  the  cash  book 


ISl 


05 


Jan.       3 


Gray  <5^  Farwell         For  Inv.  No.  9 


181    05 


114 


BOOKKEEPING 


The  record  of  this  purchase  might  be  made  by  the  following  entry  in  the  cash  book 
on  the  credit  side  : 


Jan. 


Mdse. 


For  Inv.  No.  9 


181 

05 

This  record  does  not  show  the  personal  account.  The  first  entry  shows  a  complete 
record,  the  second  does  not.  Follow  the  first  method  in  this  set  in  recording  the 
purchases  and  sales  of  merchandise  only. 

File  the  invoice  and  the  check.     Where .'' 

Note.  — It  is  customary  to  file  invoices  of  purchases  in  some  systematic  manner  so  that  reference  may 
be  made  to  them  easily  and  promptly.  There  are  several  methods  in  general  use.  One  is  to  paste  them  in 
a  specially  prepared  book,  numbering  the  invoices  consecutively  as  they  are  entered.  The  record  in  the 
book  of  entry  contains  this  number,  thus  making  reference  easy.  Another  common  way  is  to  file  the 
invoices  in  a  specially  prepared  binder,  numbering  as  before.  Each  method  has  its  advantages  and 
disadvantages. 

10 

Jan.  4.     The  proprietor  ordered  from  W.  P.  Rend  &  Co.  coal  for  use  in  the  store. 
The  coal  has  been  delivered  and  you  will  find  the  invoice  in  Pad.  No.  2. 
Practice.  —  Treat  the  bill  according  to  its  terms. 

Bookkeeping.  —  Record  in  the  cash  book  on  the  credit  side,  charging  to  Expense. 
File  the  papers. 

11 
Jan.  4.     Order  from  F.  M.  Ailing  &  Son,  New  York,  the  following  goods: 

5  H/C  Y.  H.  tea. 

3  H/C  English  breakfast  tea. 

5  H/C  Formosa  Oolong  tea. 

See  Transaction  3  for  instructions. 

12 

Jan.  4.     Order  from  Antonio  Valdez  &  Co.,  Philadelphia,  Pa.,  the  following  goods: 

5  bags  O.  G.  Java  Coffee. 
10  bags  Golden  Rio  Coffee. 
See  Transaction  3  for  instructions. 

13 
Jan.  T).     Sale  according  to  ticket  No.  13. 

Practice.  —  You  will  find  the  sales  ticket  bearing  the  number  of  this  transaction  in 
Pad  No.  3.  The  sales  tickets  are  made  out  by  sales  or  order  clerks,  who  see  to  the 
filling  of  the  orders.  They  are  then  sent  to  the  bookkeeping  department ;  first,  for  a 
guide  in  making  out  the  bill ;  second,  for  making  the  bookkeeping  record.  They  are 
then  filed  for  future  reference. 

Make  out  an  invoice  for  the  sale  in  this  transaction.  For  a  model  refer  to  invoice 
received  in  transaction  No.  9.     Use  selling  prices  as  shown  on  the  ticket. 


BUSINESS    PRACTICE  115 

Bookkeeping.  —  Enter  the  sale  in  your  sales  book. 

File  the  sales  ticket  and  dispose  of  the  bill  as  directed  in  the  general  instructions 
given  at  the  beginning  of  the  set. 

14 

Jan.  6.  Received  from  the  Union  Milling  Company  flour  ordered  on  the  3d  inst., 
also  invoice  and  bill  for  freight  charges. 

Practice.  —  The  invoice  and  freight  bill  will  be  found  in  Pad  No.  2,  Write  a  check 
in  favor  of  the  railroad  company  for  the  freight. 

Bookkeeping.  —  Enter  the  invoice  in  the  day-book  journal  thus:  Debit  mdse.  and 
credit  the  Union  Milling  Company  for  the  amount  of  the  purchase.  Give  the  entry  the 
date  of  the  invoice  and  explain  it  thus:  "  Invoice  No.  14." 

Enter  the  payment  in  the  cash  book  on  the  credit  side.  Charge  the  item  to  Freight, 
using  for  an  explanation  "  On  invoice  No.  14." 

File  the  invoice,  the  check,  and  the  freight  bill  in  proper  envelopes. 

15 

Jan.  8.     Sale  according  to  ticket. 

See  Transaction  lo  for  instructions  relating  to  practice  and  bookkeeping. 

16 

Jan.  8.     Sale  according  to  ticket. 
See  Transaction  13  for  instructions. 

17 

Jan.  8.  Received  goods  from  New  York  in  accordance  with  accompanying  invoice, 
also  freight  bill  from  the  railroad  company. 

QUESTIONS 

1.  What  bookkeeping  record  of  the  purchase  will  you  make  .-*  Of  the  check  in  pay- 
ment of  the  freight .'' 

2.  What  is  the  object  of  the  check  marks  that  you  notice  on  the  left  margin  of  the 
invoice  .'' 

3.  Where  will  you  file  the  invoice  .-*     The  freight  bill  .-*     The  check  .'' 

4.  What  is  your  check  book  balance  after  completing  this  transaction  ? 

To  verify  what  you  have  decided  to  do,  refer  to  Transaction  14,  since  the  transac- 
tions are  similar. 

18 
Jan.  8.     Sale  according  to  ticket. 

Practice. — This  sale  is  for  cash.  You  will  find  the  check  for  the  payment  in  Pad 
No.  1. 

Make  out  the  bill  according  to  previous  instructions.  As  this  is  a  cash  sale,  write 
beneath  the  items  thus  : 

Received  Payment, 

B.  J.  Knoiiss 

By  (^Your  Name). 


116 


BOOKKEEPING 


Bookkeeping.  —  Make  the  cash  book  and  sales  book  entries.  Although  this  is  a  sale 
for  cash,  the  buyer  is  debited  for  the  merchandise  and  credited  with  the  payment. 
Hereafter  you  will  follow  this  form  of  entry  whenever  the  name  of  the  purchaser  is  given. 

File  the  ticket  and  the  invoice. 


19 


Jan.  10.     Received  goods  from  Philadelphia  according  to  invoice,  also  freight  bill. 
See  Transaction  14  for  information  relating  to  practice  and  bookkeeping. 


Jan.  10.     Sale  according  to  ticket. 
See  Transaction  18  for  instructions. 


20 


21 


Jan.  10.  Balance  your  cash  book.  Find  the  balance  in  the  usual  manner,  but  do 
not  enter  it  until  you  have  tested  its  correctness.  This  is  done  by  adding  to  the  check 
book  balance  the  sum  of  currency  and  checks  on  hand.  If  your  work  is  correct,  this 
amount  will  equal  the  cash  book  balance.  If  the  two  results  agree,  enter  the  balance 
as  below  and  rule  up  the  book  as  usual.  Date  the  balance  Jan.  11  in  bringing  it  down. 
Show  the  amount  of  cash  in  the  bank  and  in  the  drawer  as  in  the  form  below. 

(Credit  side  of  cash  book  showing  the  last  entry  and  the  form  of  closing.) 


10 
10 


Freight 


On  Invoice  No.  19 
Tola!  Payments 

In  Bank        $xxxx.xx 


Bal. 


\  In  Drawer        xxx.xx 


X 

XX 

X 

XXX 
XXX 

XX 

x'x 

X 

XXX 

XX 

1 

What  errors  might  exist  in  the  cash  book  not  revealed  by  the  above  test .-' 

Deposit  checks  and  currency  in  the  bank,  keeping  out  ;^25  in  currency  of  the 
smallest  denominations. 

Practice.  —  Indorse  all  checks,  using  full  indorsements.  List  checks  on  the  deposit 
slip  in  the  column  at  the  left,  then  carry  the  total  to  the  right-hand  column  following 
"  Total  checks  and  drafts." 

Bookkeeping.  —  No  debit  or  credit  entry  will  be  made.  The  teller  will  enter  the 
amount  of  the  deposit  in  your  pass  book,  and  you  will  add  the  total  deposit  to  the 
balance  on  the  stub  of  your  check  book.  Before  disposing  of  the  deposit  ticket,  copy 
an  itemized  statement  of  the  deposit  on  the  back  of  the  last-used  stub  in  your  check 
book.  This  statement  may  be  of  great  assistance  in  detecting  errors.  Some  business 
houses  make  duplicate  deposit  tickets  and  file  one  of  them  for  reference. 

Posting.  —  Open  accounts  as  needed,  allowing  space  as  follows  :  B.  J.  Knouss.  1  page  ; 
Merchandise,  1  page;  all  other  accounts,  one  half  page  each.  The  address  should  be  a 
part  of  the  heading  of  personal  accounts. 

Post  day-book  journal,  cash  book,  and  sales  book  as  previously  instructed  in  Set  4. 


BUSINESS   PRACTICE 


117 


Be  sure  that  all  items  are  postmarked. 

Check  all  posting  to  insure  accuracy. 

Rule  up  all  accounts  that  balance,  and  do  not  include  them  in  the  trial  balance. 

Enter  footings  in  small  pencil  figures  in  all  ledger  accounts. 

Take  a  trial  balance  and,  when  approved,  copy  it  on  the  special  ruled  pages  for  trial 
balances.  This  form  is  known  as  a  continued  trial  balance  ruling.  Use  the  first  debit 
and  credit  money  columns.  Enter  the  date  of  the  trial  balance  in  the  space  at  the  top 
of  the  columns. 

Do  not  erase  the  small  pencil  footings  in  the  ledger. 


22 


Jan.  11.     Sale  according  to  ticket. 


QUESTIONS 

1,  What  papers  will  you  make  out .'' 

2.  What  bookkeeping  record  will  you  make.? 


Jan.  12.     Sale  according  to  ticket. 


23 


24 


Jan.  12.     Petty  cash  sales  according  to  ticket. 

Practice.  —  Petty  cash  sales,  sometimes  called  sundry  cash  sales,  represent  cash  sales 
in  various  amounts  to  customers  with  whom  no  accounts  are  kept.  To  buy  on  account 
one  must  have  credit  or  standing  with  the  merchant.  A  large  number  of  buyers,  how- 
ever, pay  cash.  Generally  tickets  are  made  out  in  dupHcate  by  the  clerk,  one  going 
with  the  sale  to  the  purchaser  and  the  other  with  the  money  to  the  cashier.  The  cus- 
tomer's name  is  usually  not  taken.  At  the  end  of  the  day  the  total  of  these  tickets 
must  equal  the  petty  sales  receipts.  Total  the  sales  on  the  sales  ticket  for  this  trans- 
action.     The  amount  should  equal  the  amount  of  currency  you  will  find  in  Pad  No.  1, 

Bookkeeping.  —  Enter  in  the  cash  book  on  the  debit  side,  thus  : 


Jan. 


12 


Mdse. 


Petty  Sales  No.  2^ 


45    50 


Jan.  12.     Sale  according  to  ticket. 


25 


26 


Jan.  12.  Send  Union  Milling  Company  a  check  for  invoice  of  the  4th  inst.,  less  the 
discount  allowed  on  the  invoice. 

Practice.  —  The  terms  on  the  invoice  show  the  rate  of  discount  to  be  deducted  if  paid 
within  the  discount  time.  Write  a  check  for  the  net  amount  of  the  invoice.  Show  the 
amount  of  discount  on  the  stub  of  the  check,  but  subtract  from  your  bank  balance  only 
the  net  amount.  Fill  out  the  voucher  on  the  back  of  the  check,  showing  the  amount 
of  the  bill,  the  discount,  and  the  net  amount.  Write  a  letter  explaining  the  transaction, 
inclosing  the  check.     Refer  to  Lesson  XXXII  for  the  correct  form  of  letter. 


118  BOOKKEEPING 

Bookkeeping.  —  The  ledger  account  shows  the  full  amount  of  the  bill.  If  you  post 
only  the  amount  of  the  check,  the  account  will  not  balance,  but  will  show  that  you  still 
owe  the  difference,  which  is  the  discount.  But  this  you  should  not  pay,  as  you  are 
entitled  to  deduct  this  amount  for  prompt  payment. 

The  instructions  following  are  the  same  as  those  in  Set  4  for  similar  transactions : 

Record  the  payment  by  check  in  the  cash  book  on  the  credit  side,  debiting  the 
Union  Milling  Company.     For  explanation  say  "For  Invoice  No.  14  less  1%." 

In  the  day-book  journal  debit  the  Union  Milling  Company  and  credit  Cash  Discount, 
For  explanation  say  "1%  on  Invoice  No.  14." 

27 

Jan.  18.     Pay  employees'  wages  to  date,  each  for  two  weeks. 

Practice.  —  Refer  to  Transaction  5  for  names  and  amounts.  Write  a  check  in  favor 
of  each  party. 

Bookkeeping.  —  An  expenditure  of  this  character  may  be  charged  to  Expense,  Salary, 
or  any  special  account  desired.  You  may  enter  the  payment  as  a  charge  to  Expense. 
Make  an  entry  in  the  cash  book  for  each  check. 

28 

Jan.  15.  Order  from  Central  Canning  Company,  Cincinnati,  Ohio,  the  following 
goods : 

100  cases  Royal  brand  tomatoes 
100  cases  Royal  brand  peas 
200  cases  Royal  brand  corn 
25  cases  Royal  brand  cherries 
25  cases  Royal  brand  raspberries. 

Practice.  —  See  Transaction  3  for  instructions. 

29 

Jan.  15.  Send  F.  M.  Ailing  &  Son,  New  York,  check  in  payment  of  goods  bought, 
less  discount  as  per  invoice. 

See  Transaction  26  for  instructions  relating  to  practice  and  bookkeeping. 

30 

Jan.  17.     Pay  currency  for  cleaning  store  room,  $5.25. 
Practice.  — You  will  find  a  receipt  for  this  amount  in  Pad  No.  1. 
Bookkeeping.  —  Enter  in  cash  book.     Charge  to  Expense. 

31 

Jan.  17.  Send  Antonio  Valdez  &  Co.  check  in  payment  of  invoice,  less  cash 
discount. 

See  Transaction  26  for  instructions  relating  to  practice  and  bookkeeping. 


BUSINESS   PRACTICE  119 

32 

Jan.  17.     Sale  according  to  ticket. 

33 

Jan.  17.     Sale  according  to  ticket. 

QUESTIONS 

1.  What  are  the  terms  of  the  sale  ? 

2.  What  record  will  you  make  in  the  sales  book  ? 

3.  What  record  will  you  make  in  the  cash  book .-' 

4.  What  is  the  object  of  carrying  the  transaction  to  the  personal  account.' 
See  Transaction  18  to  verify  your  answers  and  records. 

34 

Jan.  17.     Pay  to  the  Tribune  for  advertising  to  date,  $12.50. 

Practice.  —  Pay  currency. 

Bookkeeping.  —  Record  in  the  cash  book,  charging  to  Expense. 

35 

Jan.  18.     Receive  a  bill  for  goods  ordered  from  Central  Canning  Company,  also 

freight  bill. 

QUESTIONS 

1.  What  paper  must  you  write  .'' 

2.  Does  the  invoice  have  the  proper  O.K. .-' 

3.  Are  the  extensions  correct? 

4.  What  entries  must  be  made  } 

5.  Where  must  each  paper  be  filed } 

36 

Jan.  20.     Deposit  checks  and  currency  in  the  bank,  keeping  about  $25  in  currency 
of  smallest  denominations. 

Practice.  —  Follow  instructions  under  Transaction  No.  21. 

37 

Jan.  20.     Petty  cash  sales  according  to  ticket. 

See  Transaction  24  for  instructions  relating  to  a  similar  transaction. 

38 

Jan.  20.     Buy  from  John  Roller,  312  Main  St. : 

20  bu.  oats  at  45^  $9. 

1  ton  Upland  hay  9.  $18. 

Practice.  —  Pay  by  check.     You  will  receive  no  bill  for  this  purchase.     The  voucher 
on  the  back  of  the  check  will  be  sufficient. 

Bookkeeping.  —  As  these  articles  were  bought  as  feed  for  the  horse,  the  purchase 
will  be  charged  to  Expense. 


120  BOOKKEEPING 

39 

Jan.  20.     Prove  and  close  your  cash  book.     Bring  down  the  balance  as  of  Jan.  22. 

Post  and  take  a  trial  balance.  Copy  it  in  the  trial  balance  book,  using  the  second 
set  of  columns  and  placing  the  date  in  the  space  at  the  top.  Write  the  names  of  the 
new  accounts  under  those  occurring  in  the  first  trial  balance. 


Jan.  22.     Sale  according  to  ticket. 
Jan.  22.     Sale  according  to  ticket. 


40 
41 


42 

Jan.  23.  —  Received  check  from  the  Travelers  Hotel  to  balance  account. 

Practice.  —  Find  check  in  Pad  No.  1.  Compare  the  amount  of  the  check  with  the 
ledger  account.     Give  the  Travelers  Hotel  a  receipt  "  In  full  of  account." 

Bookkeeping.  —  Record  the  check  as  a  cash  receipt,  crediting  the  Travelers  Hotel 
and  using  as  an  explanation  "  In  full  of  account." 

43 

Jan.  24.     Sale  according  to  ticket. 

44 

Jan,  24.     Received  a  check  from  the  Cleveland  Hotel  to  balance  account. 
See  Transaction  42  for  information  relating  to  practice  and  bookkeeping. 

45 

Jan.  25.     Pay  lighting  bill  to  Jan.  15,  by  check  $  5.25. 

Practice.  —  Write  a  check  for  the  amount,  filling  out  the  voucher  on  the  back.  Make 
the  check  in  favor  of  the  Consumers'  Gas  Company. 

Bookkeeping.  —  Record  in  the  cash  book  on  the  credit  side,  charging  the  item  to 
Expense. 

46 

Jan.  26.     Send  the  Central  Canning  Company  a  check  in  payment  of  their  last  bill, 

less  the  discount  they  quote. 

47 

Jan.  27.     Sale  according  to  ticket. 

48 

Jan.  27.     Petty  cash  sales  according  to  ticket. 

QUESTIONS 

1.  What  is  meant  by  petty  sales  ? 

2.  Is  a  record  kept  of  the  individual  sales  .■* 

3.  With  what  must  the  total  of  such  sales  agree  at  the  end  of  the  day.? 

49 

Jan.  27.     Sale  according  to  ticket.     The  purchaser  pays  $  20  to  apply  on  account. 


BUSINESS   PRACTICE  121 

Practice.  —  Make  out  a  bill  as  usual,  terms,  account.  Following  the  last  item  on 
the  bill,  write  "  Credit  by  cash  $20,"  deduct  this  amount  from  the  total  of  the  sale,  show- 
ing the  balance  due,  but  do  not  sign  the  proprietor's  name. 

Bookkeeping.  —  Enter  the  sale  in  the  sales  book,  charging  the  purchaser  as  if  no 
payment  had  been  made.  Enter  the  payment  of  $  20  in  the  cash  book,  crediting  the 
purchaser. 

When  all  items  are  posted,  how  will  the  purchaser's  account  stand  in  the  ledger  ? 

50 

Jan  27.     Sale  according  to  ticket. 

51 

Jan  29.     Pay  employees'  wages  for  the  past  two  weeks  by  checks. 
See  Transactions  6  and  27. 

52 
Jan.  29.     Sale  according  to  ticket. 

53 

Jan.  30.     Test  your  cash  balance. 

54 

Jan.  30.     Received  a  check  from  the  Reynolds  Catering  Co.  for  bill  dated  Jan.  8. 

QUESTIONS 

1.  What  bookkeeping  record  will  you  make  .'' 

2.  What  will  you  do  with  the  check  .-* 

3.  You  may  give  a  receipt.     Is  it  necessary  ? 

55 

Jan.  30.      Sale  according  to  ticket. 

56 

Jan  31.  Give  John  Swanson  a  check  for  $  5  for  rent  of  space  used  in  his  barn  for 
month  of  January. 

Practice.  —  You  will  find  a  receipt  in  the  proper  pad. 
Bookkeeping.  —  Record  the  payment  in  the  cash  book. 

57 

Jan.  31.  Deposit  all  checks  and  currency  of  denominations  greater  than  five-dollar 
bills.     Follow  previous  instructions. 

58 

Jan.  31.  The  following  are  instructions  for  closing  your  books  to  determine  the 
present  worth  of  the  business  : 

1.  Prove  your  cash  book  and  close  it. 

2.  You  will  receive  a  statement  from  your  bank,  with  all  checks  that  have  been 
presented  for  payment  to  date.  These  checks  are  stamped  "  Paid  "  and  are  valuable  to 
you  as  evidence  of  payments  that  you  have  made. 


122 


BOOKKEEPING 


BANKERS  SCHOOL  BANK        In  Acc't 


J9  — 
Jan. 


1 
10 
20 
31 


Deposit 


JfiO 
155  60 


128 
416 


06 
24 


The  following  form  shows  the  first  page  of  the  pass  book  after  the  deposits  for 
January  are  entered  : 

The  Bank  Statement.  —  Although 
the  statements  used  by  banks  vary  some- 
what in  form,  they  all  embody  the  es- 
sential features  of  the  one  you  receive. 
The  amounts  for  which  the  bank  has 
credited  your  account  are  shown  in  one 
column;  these  should  agree  with  the  en- 
tries in  the  pass  book.  The  charges 
against  your  account  appearing  in  another 
column  should  agree  with  the  vouchers 
returned  to  you. 

At  the  close  of  February  and  of 
March  you  will  be  provided  with  blank 
statement  forms  ;  either  these  will  be 
filled  out  for  you,  or  you  will  perform 
the  work  according  to  the  instructions  of 
your  teacher. 

Arrange  the  returned  checks  consecu- 
tively and  compare  each  check  with  its 
stub  as  to  amount.  As  each  check  is 
compared,  check-mark  the  stub.  When 
you  have  compared  all  the  returned 
checks,  the  stubs  unchecked  will  repre- 
sent those  that  have  not  been  presented 
to  your  bank  for  payment.  Make  a  list  of  these  unpaid  checks  and  find  the  total. 
This  amount  will  be  equal  to  the  difference  between  the  balance  shown  by  your  check 
book  and  that  shown  by  your  statement.  The  statement  balance  should  equal  the 
check  book  balance  if  all  checks  drawn  have  been  presented  for  payment.  If  all  have 
not  been  presented,  the  statement  balance  should  be  the  greater  by  the  amount  of 
these  unpaid  checks. 

The  form  below  is  one  of  several  ways  in  which  the  work   may  be   arranged   to 

show  the  agreement  of  the  check  book  and 
CHECK    PROOF,  JAN.  31,  19—.  statement  balances. 


Check  Book  Balance 

XXX 

XX 

Checks  out:  No. 

XX 

XX 

li 

XX 

i( 

XX 

t( 

XX 

11 

X 

Statement  Balance 

770 

76 

QUESTIONS 

1.  Can  the  statement  balance  ever  be  less 
than  the  check  book  balance  "!     Why  .'' 

2.  If  all  the  checks  issued  are  returned, 
why  must  the  check  book  balance  and  the 
statement  balance  be  equal  .-* 


BUSINESS   PRACTICE  123 

3.  Post  the  day-book  journal,  sales  book,  and  cash  book. 

4.  Check  your  posting. 

5.  Take  a  trial  balance,  and  after  it  has  been  approved,  copy  it  in  the  trial  balance  book. 

6.  Credit  the  following  inventories  : 

Mdse.  $2826. 

Horse  and  wagon  343. 

Insurance  68.75 

Expense  20. 

Fixtures  183.40 

7.  Close  the  ledger  and  take  a  second  trial  balance.  When  correct,  copy  it  in  the 
trial  balance  book. 

8.  Make  a  balance  sheet. 

59 

Jan.  31.    Send  statements  to  all  persons  or  firms  owing  you  on  account, 

60 

Feb.  1.  Mr.  Knouss  some  time  ago  placed  a  proposition  before  you  by  which  you 
might  secure  a  one-third  interest  in  the  business.  You  have  decided  to  accept  his  pro- 
posal. You  consider  the  present  worth  of  the  business  as  shown  by  the  balance  sheet 
correct,  and  you  are  to  pay  Mr.  Knouss  on  the  basis  of  your  interest.  The  capital  of 
the  business  remains  unchanged.  The  payment  you  make  to  Mr.  Knouss  is  a  private 
matter  and  does  not  appear  on  the  books  of  the  business. 

The  articles  of  copartnership,  of  which  each  partner  will  have  a  copy,  give  detailed 
information  to  guide  you  in  conducting  the  business.  You  will  find  your  copy  of  these 
articles  in  your  outfit.     Mr.  Knouss  has  signed  it  and  you  will  do  the  same. 

If  the  business  has  on  hand  any  notes,  checks,  etc.,  you  will  indorse  them  in  full  in 
favor  of  the  new  firm.  The  name  of  the  new  firm  will  be  B.  J.  Knouss  &  Co.  Mr. 
Knouss's  interest  in  the  insurance  policy  and  lease  must  be  assigned ;  you  may  assume 
that  the  insurance  company  and  the  owner  of  the  building  have  consented  to  these 
assignments,  and  that  Mr.  Knouss  has  made  the  transfers. 

It  will  also  be  necessary  to  notify  the  bank  of  the  change  in  the  firm  and  leave  the 
new  signature  there.  You  will  write  a  check  in  favor  of  the  new  firm  for  the  balance 
in  the  bank  according  to  your  check  stub  and  immediately  deposit  it  in  the  bank. 

All  firms  with  whom  Mr.  Knouss  has  had  dealings  should  be  notified  of  the  change 
that  has  occurred  in  the  firm. 

Bookkeeping.  —  Debit  B.  J.  Knouss's  account  with  one  third  of  his  present  worth  and 
credit  your  account  with  the  same  amount.  A  short  explanation  of  the  agreement,  new 
name  qf  the  firm,  sharing  of  gains  and  losses,  etc.,  should  follow  this  entry. 

Hereafter  few  explanations  will  be  given.  New  transactions  will  be  explained,  but 
it  is  believed  that  you  will  be  able  successfully  to  carry  out  transactions  similar  to  pre- 
vious ones  without  constant  reminders  and  injunctions.  Give  each  transaction  careful 
consideration.  Consider  whether  everything  has  been  done.  Make  a  record  of  every- 
thing that  you  do,  so  that  if  an  error  is  made,  it  may  be  traced  and  corrected. 


124 


BOOKKEEPING 


THE   USE   OF   PRICE   LISTS 

In  some  transactions  that  follow  you  will  receive  orders  for  merchandise  from  out-of- 
town  customers.     As  these  orders  come  to  you  they  do  not,  as  a  rule,  contain  the  prices 

Selling  Price  Lists  for  February  and  March 
Lists  1-15 


I 

2 

3 

4 

5 

6 

7 

8 

9 

lO 

II 

12 

13 

14 

a 

15 

Apples 

P2 

202 

202 

203 

202 

202 

202 

202 

202 

202 

202 

202 

202 

202 

20^ 

Asparagus     . 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

Beets  .     .     . 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

Cherries   .     . 

235 

235 

2S5 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

Corn   .     .     . 

.85 

.86 

.87 

.88 

.89 

.85 

.86 

.87 

.88 

.89 

.90 

.90 

.90 

.90 

.90 

Peaches    .     . 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

Peas    . 

.93 

.95 

.97 

.99 

201 

203 

205 

207 

209 

Pl 

.90 

.91 

.92 

.93 

.94 

Plums 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

Raspberries  . 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

Tomatoes      .     . 

.90 

.90 

.90 

.90 

.90 

.90 

.90 

.90 

.90 

.90 

.85 

.85 

.85 

.85 

.85 

Lists 

16- 

■30 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 
202 

29 
202 

30 

Apples 

202 

202 

202 

202 

202 

202 

202 

202 

202 

202 

202 

202 

220 

Asparagus 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

Beets    .     . 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

Cherries   . 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

Corn    . 

.90 

.90 

.90 

.90 

.90 

.80 

.80 

.80 

.80 

.80 

.80 

.80 

.80 

.80 

.80 

Peaches     . 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

Peas     .     . 

.95 

.96 

.97 

.98 

.99 

.95 

.95 

.95 

.95 

.95 

.95 

.95 

.95 

.95 

.95 

Plufns 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

Raspberries 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

Tomatoes 

.85 

.85 

.85 

.85 

.85 

.80 

.81 

.82 

.83 

.84 

.85 

.86 

.87 

.88 

.89 

Lists 

31- 

45 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 

41 

42 

43 

44 

45 

Apples       

202 

202 

202 

202 

202 

202 

202 

202 

202 

202 

202 

202 

202 

202 

202 

Asparagus 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

260 

Beets    .     . 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

.83 

Cherries    . 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

235 

Corn    .     . 

.85 

.85 

.85 

.85 

.85 

.80 

.80 

.80 

.80 

.80 

.89 

.89 

.90 

.90 

.80 

Peaches     . 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

265 

Peas     .     . 

.80 

.85 

.90 

.95 

200 

200 

200 

200 

200 

200 

201 

P^ 

.94 

.99 

.95 

Plums 

260 

260 

260 

260 

260 

260 

260 

200 

260 

260 

260 

260 

260 

260 

260 

Raspberries 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

275 

Tofnatoes 

.90 

.90 

.90 

.90 

.90 

.70 

.75 

.80 

.85 

.90 

.90 

.90 

.85 

.85 

.84 

BUSINESS    PRACTICE  125 

of  the  commodities,  and  you  will  be  required  to  supply  the  omissions  from  the  price  list 
assigned  to  you  by  your  teacher.  Enter  the  prices  on  the  original  order,  and  then  make 
out  the  customer's  bill  from  it,  and  file  the  order.  If  prices  of  commodities  are  not 
given  in  the  Ust,  they  will  be  found  in  the  text. 

61 
Feb.  1.     Order  from  Union  Milling  Company  as  follows : 
20  bbl.  F.  flour 
10  bbl.  10  sacks  F.  flour 
10  bbl.  80  sacks  F.  flour 
10  bbl.  Union  Medal  flour 
5  bbl.  20  sacks  Union  Medal  flour 
5  bbl.  40  sacks  Union  Medal  flour. 

62 

Feb.  1.     Pay  rent  for  the  present  month  by  check. 

63 

Feb.  1.     Order  from  the  Central  Canning  Company  as  follows  : 

100  cases  R.  B.  peas 

50  cases  R.  B.  corn 
100  cases  R.  B.  tomatoes 

30  cases  R.  B.  asparagus 

10  cases  R.  B.  pumpkins 
5  cases  R.  B.  beets 

20  cases  R.  B.  cherries 

10  cases  R.  B.  apples 

50  cases  R.  B.  peaches 

20  cases  R.  B.  plums. 

64 

Feb.  1.     Sale  according  to  order. 

Practice.  — You  will  find  this  order  in  Pad  No.  2.  The  terms  are  C.O.D.  Make 
out  an  invoice,  billing  135  lb.  at  $  .18.  Receipt  the  bill.  In  your  supphes  you  will  find 
express  envelopes.  Fill  one  out  except  the  line  for  charges.  Fold  the  bill  lengthwise 
once  and  inclose  in  the  envelope,  but  do  not  seal.  Write  on  the  lower  end  of  the 
envelope,  "  Collect  return  charges." 

When  the  express  company  calls  for  the  goods,  they  will  be  given  the  envelope,  which 
is  their  notice  to  collect  the  amount  of  the  sale  before  they  deliver  the  goods.  The 
company  will  make  a  delivery  of  the  goods,  collect  the  amount  due  you,  and  return'  the 
envelope  containing  the  company's  money  order.  In  practice  when  a  representative  of 
an  express  company  receives  goods  to  be  forwarded,  he  issues  a  receipt  for  them  or  he 
receipts  for  them  in  a  book  furnished  by  the  company  for  this  purpose.  File  the  envelope 
with  outgoing  papers. 


126  BOOKKEEPING 

Bookkeeping. — Two  methods  are  in  general  use,  one  charging  to  "  C.O.D.  Ac- 
count," using  the  name  of  the  buyer  as  an  explanation  in  the  ledger,  and  the  other 
charging  the  express  company.  As  the  latter  is  considered  more  practical,  use  it.  This 
account  will  be  used  for  all  C.O.D.  sales  handled  for  you  by  the  same  express  company. 
Make  the  sales  book  entry  accordingly. 

65 

Feb.  2.     Order  from  F.  M.  Ailing  &  Son,  New  York  : 

10  H/C  Y.  H.  tea 
5  H/C  Extra  Oolong  tea 
2  H/C  Ceylon  tea 
5  H/C  Best  English  Breakfast  tea. 

66 

Feb.  2.     Pay  $8  in  currency  for  postage  stamps. 

Practice.  — Various  methods  are  used  to  keep  track  of  this  expense  item.  It  is  gen- 
erally necessary  to  pay  currency  for  stamps,  as  the  postal  authorities  will  not,  as  a  rule, 
take  checks  on  account  of  the  personal  liability.  Large  firms  generally  make  some  one 
responsible  for  the  purchasing  of  the  stamps  and  their  use.  The  letters  and  packages 
sent  are  sometimes  counted  and  a  record  made  of  stamps  used.  The  cash  book  record 
will  be  your  voucher. 

Bookkeeping.  —  Charge  the  item  to  Expense. 

67 

Feb.  2.     Sale  as  per  order.     Bill  80  lb.  at  $  .32.     See  Transaction  64  for  instructions. 

68 

Feb.  2.     Sale  according  to  order. 

Practice.  —  Make  out  the  bill  in  accordance  with  the  order. 
Bookkeeping.  —  Charge  the  purchaser  with  the  sale. 

69 

Feb.  3.     Sale  according  to  order. 

See  Transaction  <)8  for  instructions  relating  to  practice  and  bookkeeping. 

70 

Feb.  3.     Received  check  from  the  Continental  Hotel  Co.  on  account. 
Practice.  —  What  bills  does  this  check  pay  .-*     Compare  with  the  ledger.     Send  a  spe- 
cial receipt  stating  bills  paid. 

71 

Feb.  3,     Petty  sales  according  to  ticket.     Do  not  fail  to  test  footings. 

72 
Feb.  5.     Received  invoice  of  flour.     Enter  in  purchase  book.     See  next  page.     Pay 
freight. 


BUSINESS   PRACTICE 


127 


THE    PURCHASE    BOOK 

Hereafter,  instead  of  recording  purchases  in  the  journal,  you  will  enter  such  transac- 
tions in  a  separate  book.  The  first  page  of  the  sales  book  has  been  reserved  for  this  pur- 
pose. Purchase  book  is  the  title  by  which  this  book  will  be  designated.  The  name  fully 
explains  its  use.  It  is  unnecessary  to  itemize  purchases.  The  form  below  illustrates  the 
method  of  recording  a  purchase. 


Qtii^^At^d^e.    ^^^a<x</i 


19— 

Feb. 


Union  Milling  Co. 


Inv.  No.  72, 60  da.,l%10da. 


380 


50 


QUESTIONS 

1.  Why  is  it  unnecessary  to  itemize  purchases .-' 

2.  To  which  side  of  the  personal  accounts  must  purchases  be  posted } 

3.  What  two  advantages  do  you  see  in  the  use  of  the  purchase  book } 
Determine  how  to  post  this  book  from  its  similarity  to  the  sales  book. 

73 

Feb.  5.     Received  invoice  of  goods  from  Central  Canning  Company.     Pay  freight. 


Feb.  5.     Sales  according:  to  tickets. 


74 


75 


Feb.  5.     Received  invoice  of  goods  from  F.  M.  Ailing  &  Son.     Pay  freight  by  check. 


Feb.  5.  Sale  according  to  order. 
Feb.  6.  Sale  according  to  ticket. 
Feb.  6.     Sale  according  to  order. 


76 


77 


78 


79 


Feb.  7.      Received  on  account  checks  from  the  following  firms : 
Reynolds  Catering  Company, 
Rheinlander  Restaurant  Company, 
Rice  Catering  Company. 

Practice.  —  Send  a  receipt  to  each  party,  stating  "  In  full  of  account,"  or  give  dates 
and  amounts  of  bills  paid. 

80 

Feb.  8.     Sale  accordins:  to  ticket. 


128  BOOKKEEPING 

81 

Feb.  8.     Order  from  Gray  &  Farwell  the  following  goods : 

4  boxes  B.  pepper 
2  boxes  Cinnamon 

10  boxes  Excelsior  laundry  soap 

5  boxes  S.  T.  soap 
20  cases  Queen  olives 

10  kgs.  10  gal.  Queen  olives 
10  cases  Rex  breakfast  food 
10  cases  C.  R.  salmon 

6  boxes  Evaporated  peaches 
5  boxes  Evaporated  pears 

10  cases  pts.  Olive  oil. 

82 

Feb.  9.     The  Inter  State  Express  Company  makes  return  for  two  C.O.D.  sales. 

Practice.  —  In  Transactions  64  and  67  the  express  company  received  merchandise 
from  you.  The  goods  have  been  delivered  to  the  buyers  and  now  the  company  brings 
you  the  proceeds  of  the  sales.  The  company  has  collected  from  the  consignee  its 
charges  for  delivering  the  merchandise  and  also  for  collecting  and  remitting  the  money. 

Bookkeeping.  —  What  account  will  you  credit  ? 

83 

Feb.  10.  Gray  Sc  Farwell  delivered  goods  ordered  on  the  8th  inst.,  together  with 
invoice.     Study  the  invoice  and  enter  according  to  terms. 

84 

Feb.  10.     Petty  cash   sales  according  to  ticket. 
Deposit  all  checks  and  currency,  except  $  20. 

85 

Feb.  10.     Sale  according  to  order.     Bill  135  lb.  at  $A1. 

86 

Feb.  10.     Received  order  by  telegram. 

Practice.  —  Fill  order  as  directed.     File  telegram  with  orders. 

Bookkeeping.  —  Charge  purchaser. 

87 
Feb.  10.     Sale  according  to  ticket. 

88 
Feb.  12.     Draw  at  sight  on  Goertz  &  Bro.  for  amount  of  sale  made  to  them  on  the 
2d  inst.,  and  leave  draft  with  your  bank  for  collection. 

Practice.  —  Refer  to  Lesson  XXXI  for  form  of  draft.  Make  the  draft  in  favor  of 
your  bank.  When  your  bank  receives  this  paper  for  collection  it  will  be  entered  on  the 
last  page  of  your  pass  book,  thus : 

"Feb.  12.     Goertz  &  Bro.  $ ." 

Write  Goertz  &  Bro.  notifying  them  of  what  you  have  done. 


BUSINESS   PRACTICE  129 

Bookkeeping.  —  No  debit  or  credit  record  is  necessary.  The  entry  will  be  made 
when  the  bank  notifies  you  of  the  collection. 

89 

Feb.  12.     Credit  salaries  for  the  past  two  weeks,  increasing  each  employee's  salary 
$  1  per  week.     Your  salary  remains  the  same. 
Bookkeeping.  —  Explain  the  entry  fully. 

90 
Feb.  12.     Pay  advertising  bill  by  check. 

91 
Feb.  13.     Buy  bank  drafts  and  remit  to  the  following  firms : 

Union  Milling  Company,  account  in  full,  less  discount. 
F.  M   AlHng  &  Son,  account  in  full,  less  discount. 
Central  Canning  Company,  account  in  full,  less  discount. 

Practice.  —  Make  out  an  order  on  the  bank,  using  one  blank  for  the  three  drafts,  and 
draw  one  check.  The  stub  of  the  check  should  show  the  transaction  in  full.  Since  the 
space  is  hardly  large  enough,  use  the  back  of  the  stub  at  the  left.  Show  amount,  dis- 
count, and  net  of  each  invoice.  You  will  find  the  drafts  in  Pad  No.  1.  Write  to  each 
firm  inclosing  proper  draft  indorsed  in  full. 

Bookkeeping.  —  Make  three  entries  in  the  cash  book,  but  one  entry  for  cash  discount 
may  cover  the  transaction  in  the  day-book  journal. 
Prove  and  balance  your  cash  book. 

92 

Feb.  13.     Sale  according  to  order. 

93 

Feb.  13.  Request  Antonio  Valdez  &  Co.  by  telegram  to  duplicate  your  order  of 
Jan.  4.     Pay  charges  for  telegram  in  currency,  50  ^. 

Practice.  —  File  a  copy  of  the  telegram,  which  should  not  exceed  ten  words. 

94 

Feb.  14.     Received  bank  draft  from  Potter,  Brown  &  Co.  to  apply  on  the  bill  of  the 

6th  inst. 

Practice.  —  Write  a  letter  acknowledging  receipt  of  draft  and  inclose  receipt. 

95 

Feb.  15.     Write  Central  Canning  Company  to  duplicate  your  order  of  Feb.  1. 

96 

Feb.  15.     Sell  your  driver  goods  according  to  ticket. 

Practice.  —  It  is  customary  for  a  house  to  sell  to  employees  at  reduced  rates.  Make 
out  a  bill  as  usual. 


130  BOOKKEEPING 

97 
Feb.  16.     See  incoming  papers  for  this  transaction. 
Practice  and  Bookkeeping  as  usual. 

98 

Feb.  16.     Sale  according  to  ticket. 

99 

Feb.  16.     The  express  company  makes  return  for  the  C.O.D.  sale  of  the  10th  inst. 

Note.  —  Since  the  express  company  does  not  issue  money  orders  for  amounts  exceeding  f.jU,  the  agent 
at  South  Haven  has  sent  you  the  express  company's  check. 

100 

Feb.  16.  The  bank  notifies  you  of  the  collection  of  your  draft  on  Goertz  &  Bro. 
and  that  the  proceeds  has  been  placed  to  your  credit. 

Practice.  —  When  the  bank  received  this  draft  on  the  12th  inst.,  a  record  was  made 
in  a  collection  register  and  the  draft  was  sent  to  a  bank  in  the  town  where  the  drawee 
resides ;  this  bank  collected  and  reported  the  collection  to  your  bank.  The  draft  might 
have  been  sent  by  you  to  a  bank  in  the  customer's  town,  and  when  collected,  that  bank 
would  have  remitted  the  proceeds  to  you  directly.  You  will  find  the  collection  notice  in 
Pad  No.  1. 

Bookkeeping.  —  Enter  in  the  cash  book  on  the  debit  side,  crediting  Goertz  &  Bro. 
for  the  face  of  the  draft.  Enter  the  collection  charges  on  the  credit  side  of  the  cash 
book,  charging  Expense.  The  bank  has  credited  your  account  for  the  proceeds  of  the 
collection.     Have  it  entered  in  your  pass  book. 

Since  you  have  received  credit  for  the  proceeds  of  the  draft,  the  amount  must  be 
added  to  the  stub  of  your  check  book.     Explain  on  the  back  of  the  stub. 

101 

Feb.  IT.     Pay  employees  by  checks,  as  follows:  salesman  $10  ;  driver  $  7.50. 

102 

Feb.  19.     See  incoming  papers  for  this  transaction. 

103 

Feb.  19.     Petty  cash  sales  according  to  ticket. 

104 

Feb.  20.     See  incoming  papers  for  this  transaction.     Bill  130  lb.  at  $.21. 

105 

Feb.  20.     Received  bank  draft  from  Zimmer  &  Co.  to  apply  on  account. 
Practice.  —  Write  a  letter  acknowledging  payment  and  inclose  a  receipt. 


BUSINESS    PRACTICE  131 

106 
Feb.  20.     Your  salesman  hands  you  checks  collected  from  the  following  city  cus- 
tomers : 

A.  B.  Anderson, 
Rheinlander  Restaurant  Co., 
Smith  &  Jones, 
Continental  Hotel  Co., 
Jenkins  House. 
Make  deposit,  retaining  ;^20  in  currency. 

107 

Feb.  20.     Send  Gray  &  Farwell  check  for  last  purchase  less  discount. 

108 
Feb.  21.     Sale  according  to  ticket. 

109 

Feb.  21,     Sale  according  to  ticket. 

110 
Feb.  21.     Sale  according  to  order. 

Ill 
Feb,  21,     Sale  according  to  order.     Use  the  following  prices  per  dozen  in  filling  this 
order:  Peaches  $1.65,  asparagus  $1.60,  beets  $.83,  peas  $.93,  plums  $1,621^. 

112 

Feb.  23.     Sale  according  to  ticket. 

113 
Feb.  23.     Sale  according  to  ticket. 

114 
Feb.  24.     Sale  according  to  ticket. 

115 

Feb.  24.     Pay  electric  light  bill  to  Feb.  15  by  check  $12.     Make  check  payable  to 
People's  Light  and  Power  Co. 

116 

Feb.  24.     Order  from  the  Union  MilUng  Company  goods  as  follows: 
20  bbl.  Family  flour 
10  bbl.  40  sk.  Family  flour 
10  bbl.  80  sk.  Family  flour 
10  bbl.  Union  Medal  flour 

5  bbl.  20  sk.  Union  Medal  flour 

5  bbl.  40  sk.  Union  Medal  flour. 

117 

Feb.  24.     Buy  a  bank  draft  and  remit  it  in  payment  of  goods  received  on  the  16th 
inst.     Refer  to  Transaction  97. 


132  BOOKKEEPING 

118 
Feb.  26.     Credit  employees  for  wages  for  the  past  two  weeks.     Credit  yourself  for 

salary  for  the  same  time. 

119 

Feb.  27.     Petty  cash  sales  according  to  ticket. 

120 

Feb.  27.     Received  notification  (See  Pad  No.  2)  from  express  company. 

Practice.  —  Write  the  agent  instructing  him  to  return  the  goods. 

121 

Feb.  28.  Received  invoice  from  the  Union  Milling  Company  for  goods  ordered 
Feb.  24,  also  freight  bill.      Mr.  Knouss  reports  4  barrels  Family  flour  injured  by  water. 

Practice.  —  From  the  invoice  deduct  the  value  of  the  damaged  goods  and  notify  the 
Union  Milling  Company  by  letter  of  what  you  have  done  and  ask  them  to  send  you  a 
memorandum  of  credit.     Ask  how  to  dispose  of  the  damaged  goods. 

Bookkeeping.  —  First  credit  the  Union  Milling  Company  for  the  full  amount  of  the 
invoice,  then  make  a  journal  entry  charging  them  with  the  value  of  the  damaged  goods. 

122 

Feb.  28.     Pay  stable  rent  in  currency.     See  Transaction  No.  56. 

123 

Feb.  28.     Pay  by  checks  as  follows  : 

Driver,  $  15  ;  salesman,  $  10  ;  yourself,  $  20  ;  Mr.  Knouss,  $  75. 

Make  deposit,  retaining  $  15  currency. 

124 

Feb.  28.     Send  statements  to  all  customers. 

125 

Feb.  28.  Close  your  books  for  the  month.  Follow  instructions  at  the  end  of 
January. 

In  distributing  the  net  gain  or  the  net  loss  for  the  month,  two  thirds  is  to  be  carried 
to  B.  J.  Knouss's  account  and  one  third  to  your  own. 

Inventories  : 

Mdse.  1^4310.96 

Fixtures,  write  off  1  % 

Insurance,  10  months'  unexpired  premium     $62.50 
Expense  $15. 

.    Horse  and  wagon,  write  off  2  %. 

To  the  Student.  —  In  writing  up  the  transactions  for  March,  follow  the  instructions 
given  in  the  previous  months.  Special  instructions  will  be  given  whenever  the  character 
of  the  transaction  makes  it  necessary. 

You  should  prove  your  cash  book  at  the  close  of  each  day's  work. 


BUSINESS   PRACTICE  133 

Take  a  trial  balance  after  the  transactions  of  the  10th  and  20th  of  the  month. 
All  checks  received  should  be  deposited  not  later  than  the  day  after  their  receipt. 
Keep  your  work  posted,  so  that  you  may  make  reference  to  the  ledger  when  settle- 
ments are  made. 

126 

March  1.     Bought  of  Harris  Bros.  &  Co.,  Chicago,  one  car  potatoes. 

Practice.  —  Make  out  a  note  in  payment  according  to  the  terms  shown  on  the 
invoice.  You  are  referred  to  Lesson  IV  for  instructions  relating  to  the  correct  form  for 
writing  notes. 

Bookkeeping.  —  Record  the  note  in  the  bills  payable  book. 

Make  a  journal  entry  debiting  Harris  Bros.  &  Co.  and  crediting  Bills  Payable. 

127 

March  1.  Ship  the  potatoes  purchased  in  Transaction  126  to  Dennis  &  Wright, 
New  York,  to  be  sold  on  your  account  and  risk. 

Practice.  —  Refer  to  Lesson  XXX  for  instructions  relating  to  shipments.  Make  out 
a  shipment  invoice,  listing  the  goods  at  cost. 

Bookkeeping.  —  Open  an  account  with  Shipment  Dennis  &  Wright. 

128 

March  1.     Order  from  the  Central  Canning  Company  goods  as  follows: 

150  cases  R.  B.  tomatoes 
100  cases  R.  B.  corn 

50  cases  R.  B.  peas 

40  cases  R.  B.  peaches 

20  cases  R.  B.  plums 

15  cases  R.  B.  cherries 

10  cases  R.  B.  pumpkins 
8  cases  R.  B.  beets 

10  cases  R.  B.  apples. 

129 

March  1.     Pay  rent  for  the  month  by  check. 

130 

March  1,     Sale  according  to  ticket. 

131 

March  2.  The  Inter  State  Express  Co.  returned  goods  not  accepted  by  Peter 
Schneider,  Peoria. 

Pay  charges  in  currency  for  carrying  the  goods  in  both  directions,  $1.75. 

Bookkeeping.  —  Charge  the  amount  paid  for  expressage  to  Expense.  Why  not 
charge  this  to  the  freight  account  .'* 


134  BOOKKEEPING 

What  account  was  debited  when  the  floods  were  given  to  the  express  company  ? 

You   should   be   able  to  decide  what  entry  to  make,  now  that  the  goods  have  been 

returned. 

132 

March  2.     Sales  according  to  ticket. 

133 
March  3.     Draw  at  sight  on  Zimmer  &  Co.  for  the  amount  they  owe  you  and  leave 
the  draft  at  the  bank  for  collection. 
See  Transaction  88  for  instructions. 

134 

March  3.     Received  a  check  from  the  Continental  Hotel  Co.  to  balance  account  to 

March  1. 

135 

March  3.     Received  from  Potter,  Brown  &  Co.  a  bank  draft  to  apply  on  account. 

136 

March  3.     Received  a  note  from  Smith  &  Jones  in  full  of  account. 

Practice.  —  Compare  the  amount  of  the  note  with  the  balance  due  from  the  maker. 

Bookkeeping.  —  This  note  is  a  bill  receivable  to  you. 

What  will  you  debit  ?    What  account  will  you  credit .-'    Enter  the  note  in  the  bill  book. 

137 

March  3.     Sale  according  to  ticket. 

138 
March  3.     Sale  according  to  order. 

139 
March  5.     Received  invoice  and  freight  bill. 

140 

March  5.      Received  memorandum  of  credit. 

Practice.  —  A  memorandum  of  credit  is  an  affirmative  answer  to  a  claim  for  damages 
or  shortage. 

Bookkeeping.  —  The  entry  is  made  either  at  the  time  of  reporting  the  shortage  or 
claim  for  damages,  or  when  the  memorandum  of  credit  is  received.  When  you  made 
the  claim  for  damages,  did  you  make  an  entry .'' 

141 

March  5.     Sale  according  to  order. 

Practice.  —  Draw  on  the  firm  as  per  instruction  in  the  letter,  leaving  the  draft  at 
the  bank  for  collection. 

142 

March  5.  Order  from  the  Elgin  Dairy  Company  40  tubs  of  best  creamery  butter. 
Direct  them  to  send  you  the  invoice,  but  to  send  the  goods  by  freight  to  R.  J.  Jerome  & 
Co.,  Buffalo,  N.Y. 


BUSINESS   PRACTICE  135 

143 

March  6.  Send  the  Union  Milling  Company  a  bank  draft  in  settlement  of  their 
last  invoice,  less  the  discount. 

144 

March  6.  Telegraph  J.  M.  Ailing  &  Son  to  duplicate  your  order  of  the  2d  inst. 
Pay  charges  in  currency  50^. 

145 

March  6.     Buy  horse  feed  from  John  Roller  as  follows : 

15  bu.  oats  at  48^  $7.20 

1  ton  Timothy  hay  at  514  7.  $14.20 

Pay  by  check. 

146 
March  6.     Sale  according  to  ticket. 

147 
March  6.     Sale  according  to  order. 

148 
March  7.     Sales  according  to  ticket. 

149 

March  7.  Received  an  invoice  from  the  Elgin  Dairy  Company.  The  goods  were 
shipped  as  per  instructions  in  Transaction  142. 

Jerome  &  Co.  are  commission  merchants  and  will  sell  these  goods  on  your  account 
and  risk. 

Practice.  —  Make  out  a  shipment  invoice  as  in  Transaction  127. 

Bookkeeping.  —  First,  record  the  purchase ;  second,  make  a  record  of  the  shipment. 

150 

March  7.  According  to  agreement,  draw  on  R.  J.  Jerome  &  Co.  for  $  200  on 
account  of  your  shipment  and  leave  the  draft  at  the  bank  for  collection. 

Practice.  —  While  commission  merchants  are  not  under  any  obhgation  to  pay  for 
the  goods  until  they  have  been  sold,  the  goods  are,  nevertheless,  in  their  possession  as 
a  security,  and  they  are  safe  in  allowing  you  an  advance  payment.  They  will  deduct 
this  amount,  and  perhaps  interest  on  the  same,  from  the  proceeds  of  the  sale. 

151 

March  7.     Sale  according  to  ticket. 

152 

March  7.  Send  the  Elgin  Dairy  Company  a  note  at  5  days  with  interest  at  6%,  in 
payment  of  their  invoice  of  the  6th  inst. 

Practice.  — Write  explaining  why  you  do  not  make  settlement  according  to  the  terms 
of  the  invoice.     Give  a  reasonable  excuse. 

153 

'  March  8.     Discount  at  the  bank  the  note  received  of  Smith  &  Jones. 


136  BOOKKEEPING 

Practice.  —  It  is  frequently  the  case  that  a  business  is  in  immediate  need  of  cash, 
while  it  has  in  its  possession  other  parties'  promises  to  pay  at  some  future  date.  Under 
these  circumstances  it  is  customary  to  sell  the  notes  or  other  paper  to  a  bank  before 
they  fall  due.  This  is  called  discounting  the  paper.  Generally  the  face  value  of  the 
paper  is  not  received.  The  bank  deducts  interest  from  the  date  of  discount  until  the 
paper  becomes  due.  When  will  the  note  in  this  transaction  become  due  .■*  For  how 
many  days  will  the  bank  deduct  interest  ?  What  is  the  amount  deducted,  if  the  rate 
is  6  %?     The  amount  deducted  is  called  discount. 

Bookkeeping.  —  In  recording  the  transaction  in  the  cash  book,  an  entry  is  first  made 

as  though  the  face  value  of  the  note  had  been  received.     The  second  entry  is  made  as 

though  the  amount  of  the  interest  had  been  paid  back  to  the  bank.     Charge  the  interest 

to  Interest  &  Discount. 

154 

March  9.     Received  invoice  and  freight  bill. 

155 

March  9.  Received  an  account  sales  of  the  shipment  of  potatoes,  together  with  a 
draft  for  the  proceeds.     See  incoming  papers. 

Practice.  —  The  account  sales  is  your  information  that  the  goods  have  been  sold. 
It  gives  not  only  the  selling  price,  but  also  the  expenses,  so  far  as  the  commission 
merchant  is  concerned,  his  charge  for  selling  and  the  amount  you  are  entitled  to  receive, 
or  net  proceeds. 

Bookkeeping. — When  the  seller  sends  you  the  amount  of  the  net  proceeds,  debit 
what  you  receive  and  credit  the  shipment  that  was  charged  when  the  goods  were 
shipped. 

156 

March  9.  A.  B.  Anderson  is  having  some  difficulty  in  meeting  his  obligations  and 
has  asked  you  to  take  his  note  at  30  days  for  the  amount  he  owes  you.  Accept  his 
proposition. 

See  Transaction  130  for  instructions. 

157 

March  10.     Sale  according  to  ticket. 

158 

March    10.     Order  from  J.    F.    Stacey,    Muscatine,  Iowa,  one  car  sweet  potatoes, 
directing  him  to  bill  the  goods  to  you  and  ship  them  to  your  Buffalo  commission  merchant. 
See  Transaction  142  for  instructions. 

159 
March  10.     Sale  according  to  ticket. 

160 

March  12.     Discount  A.  B.  Anderson's  note  at  the  bank. 
See  Transaction  153  for  instructions. 

161 

March  12.     Pay  note  due  to-day,  with  interest,  by  check. 


BUSINESS   PRACTICE  137 

Practice.  —  When  the  note  was  issued  it  was  filed  with  the  outgoing  papers.  Some 
one  instructed  by  your  teacher  to  act  for  the  payee  should  now  write  across  the  face 
"Paid  March  12,  19  —  " 

Bookkeeping.  —  Make  two  entries  in  the  cash  book,  one  for  the  face  of  the  note,  and 
one  for  the  interest.     Now  file  the  note  with  paid  bills  and  notes. 

162 

March  12.     Credit  the  salaries  due  to  date. 


163 


March  12.     Sale  according  to  ticket. 


164 

March  12.     Received  an  invoice  for  sweet  potatoes  ordered  March  10. 
Bookkeeping.  —  Make  two  entries.     See  Transaction  149. 

165 

March  12.     J,  F.  Stacey  draws  on  you  at  10  days'  sight  or  the  amount  of  his  invoice. 
Practice.  — Accept  the  draft.     See  Lesson  XXXI. 

166 

March  13.     Sale  according  to  ticket. 

167 

March  13.     Send  the  Central  Canning  Company  check  to  apply  on  account,  1^200. 
Ask  for  credit  memorandum  of  the  following  shortage  in  shipment  of  March  3 : 
10  cases  R.  B.  corn  20  doz.  at  ^.72  1^14.40 

2  cases  R.  B.  apples  2  doz.  at  $.86  1.72 

;^  16.12 
Bookkeeping.  —  Follow  instructions  in  Transaction  121. 

168 

March  14.     Sale  according  to  ticket. 

169 

March  14.     The  bank  reports  the  collection  of  three  drafts,  collection  charges  45^. 
See  Transaction  100  for  instructions. 

170 

March  14.     Draw  at  sight  on  the  following  firms  to  balance  their  account : 

Geo.  Bowman. 

Potter,  Brown  &  Co. 
Leave  drafts  at  the  bank  for  collection. 

171 

March  14.     Mrs.  W.  E.  Blair  paid  her  bill  of  Feb.  8.     Give  a  receipt. 

172 

March  14,     Sale  according  to  ticket. 

173 
March  15.     Received  an  account  sales,  also  a  draft  for  balance  of  proceeds. 


138  BOOKKEEPING 

174 
March  15.     Pay  j^lO  in  currency  for  an  office  chair. 

175 

March  15.     The  Rice  Catering  Company  paid  their  account. 

176 

March  16.     Young  &  Gregg  paid  their  bill  of  March  14,  less  discount. 

Amount  of  the  bill $  xxx.xx 

Less  2  %  discount x.xx 

Net  amount  per  draft  .  .  .  .  $  xxx.xx 

Bookkeeping.  —  Make  a  cash  book  entry  for  the  face  of  the  draft.     Enter  the  cash 

discount  in  the  day-book  journal.     The  two  credits  to  Young  &  Gregg  must  equal  the 

amount  of  the  bill. 

177 

March  16.     Petty  cash  sales  according  to  ticket.    • 

178 

March  19.     Sale  according  to  ticket. 

179 

March  19.     Received  credit  memorandum.     Have  you  made  the  bookkeeping  entry 

for  this  credit .'' 

180 

March  20.     The  bank  credited  your  account  for  two  collections. 

181 

March  20.     Sale  according  to  ticket. 

182 

March  22,     Received  an  account  sales. 

183 

March  22.     Write  a  check  in  favor  of  J.  F.  Stacey  in  payment  of  the  draft  accepted 
on  the  12th  inst. 

Practice.  —  The  draft  is  a  bills  payable.     See  Transaction  161. 

184 

March  23.     Sale  according  to  ticket. 

185 

March  23. ,   Pay  People's  Light  &  Power  Co.  for  lighting  to  March  15  by  check, 
$12.25. 

186 
March  26.     Draw  at  sight  on  R.  J.  Jerome  &  Co.  for  the  net  proceeds  of  shipment 
and  leave  draft  at  the  bank  for  collection. 

187 

March  26.     Credit  salaries  to  date. 


BUSINESS   PRACTICE  139 

188 

March  28.     Petty  cash  sales  according  to  ticket. 

189 

March  30,     Sale  according  to  ticket. 

190 

March  31.     The  Jenkins  House  failed,  and  your  account  with  them  is  a  total  loss. 

Practice.  — As  this  is  a  loss  to  you,  the  account  should  not  be  allowed  to  stand  on 
your  books  as  an  asset.  Some  firms  set  aside  a  certain  per  cent  of  their  sales  to  cover 
such  losses,  and  others  simply  close  the  account  to  Loss  and  Gain.  In  a  large  concern 
the  former  is  preferable. 

Bookkeeping.  —  Make  the  entry  in  the  day-book  journal,  debiting  Loss  and  Gain  and 
crediting  the  firm  for  the  amount.     Give  a  full  explanation  for  this  entry. 

191 

March  31.     The  bank  reports  a  collection. 

192 

March  31.  Pay  by  checks  all  unpaid  salaries  that  have  been  credited  on  the  books. 
Deduct  from  James  Rooney's  account  the  amount  of  his  purchases. 

193 

March  31.     Pay  stable  rent  in  currency  ;  get  receipt. 

194 

March  31.     Close  the  books  and  make  a  statement,  following  instructions  at  the  end 
of  January  and  of  February. 
Inventories : 

Merchandise  ^2850.88 

Expense  10. 

Horse  and  Wagon  :  write  off  2  % 

Fixtures  :  write  off  1  % 

Insurance,  9  months'  unexpired  premium  56.25 

195 

Selling  the  business  and  closing  the  books  subsequent  to  the  sale. 

Mr.  William  Anderson  has  offered  to  buy  the  business  for  $5250  cash,  the  sale  not 
to  include  the  cash  on  hand.  The  offer  provides  that  all  outstanding  obligations  of 
the  firm  shall  be  paid  by  the  present  owners.  After  careful  consideration  Mr.  Knouss 
and  you  decide  to  accept  the  offer. 

Mr.  Anderson  will  continue  the  business  at  the  present  location.  The  consent  of 
the  owner  of  the  building  and  of  the  insurance  company  for  the  transfer  of  interests 
has  been  secured. 

Mr.  Anderson  will  open  a  new  set  of  books,  and  requested  that  the  bill  of  sale,  w^hich 


140  BOOKKEEPING 

will  be  drawn  up  and  delivered  by  Mr.  Knouss,  shall  contain  the  following  items : 
Merchandise,  fixtures,  horse  and  wagon,  at  5  %  less  than  their  inventory  values ;  un- 
expired insurance  at  the  inventory  value ;  a  list  of  accounts  receivable,  with  2|-  % 
deducted  from  the  total ;  good  will  for  the  balance  of  the  purchase  price.  From  the 
bill  of  sale  Mr.  Anderson's  bookkeeper  can  debit  the  proper  accounts  in  opening  a  new 
set  of  books. 

Note.  —  The  good  will  of  a  business  is  a  valuation  placed  upon  the  established  trade,  its  reputation,  etc. 
Frequently  this  item  appears  among  the  assets  of  a  business.  It  will  do  so  in  Mr.  Anderson's  books.  In 
your  books  it  will  finally  appear  as  a  gain. 

The  closing  of  your  books  may  be  accomplished  as  follows : 

1.  Issue  checks  in  payment  of  all  accounts  you  owe. 

2.  Give  a  check  in  payment  of  the  unpaid  note  by  agreement,  deducting  discount  at 
the  rate  of  6%. 

3.  Make  a  journal  entry,  debiting  Mr.  Anderson  for  $5250  and  crediting  the  accounts 
listed  in  the  bill  of  sale ;  also  debiting  Loss  and-  Gain  for  the  21  %  deducted  from  the 
accounts  receivable.     Explain  this  entry  fully. 

4.  Make  an  entry  for  the  check  received  from  Mr.  Anderson.     See  Pad  No.  2. 

5.  Post  all  entries,  and  then  make  a  journal  entry  to  close  the  merchandise,  horse 
and  wagon,  and  fixtures  accounts  to  Loss  and  Gain.     Explain  the  entry  fully. 

Note.  —  The  deductions  made  on  the  property  are  not  discounts  in  the  usual  sense.  They  are  losses 
incidental  to  the  selling  out  of  the  business.  Those  on  the  accounts  receivable  are  allowances  for  cost  of 
collections  and  possible  losses. 

6.  Make  a  journal  entry  to  close  expense  and  good  will  to  Loss  and  Gain,  The  item 
of  $10  in  the  inventory  consisted  of  such  expense  items  that  had  real  values  on  the 
supposition  that  the  business  would  be  continued  by  the  same  proprietors,  but  that  are 
worthless  to  the  purchaser. 

Note.  —  All  accounts  here  closed  to  Loss  and  Gain  by  journal  entries  might  have  been  closed  through 
the  ledger.  But  since  explanations  were  necessary,  the  journal  was  the  more  convenient.  Some  bookkeepers 
always  journalize  closing  entries  affecting  Loss  and  Gain,  and  there  is  much  to  be  said  in  favor  of  this  practice. 

7.  After  posting  all  entries,  make  a  journal  entry  to  close  the  Loss  and  Gain  account. 
Post  this  entry. 

8.  Deposit  the  check  received  from  Mr.  Anderson. 

9.  Write  a  check  in  favor  of  each  partner  for  the  amount  of  his  net  capital  as  shown 
by  his  account.  Make  the  cash-book  entries  and  post.  If  you  have  not  made  any 
mistakes  in  your  work.'the  cash-book  and  all  ledger  accounts  will  now  be  in  balance. 
Rule  them  up. 


INDEX 


Abbreviations,  vii. 
Acceptance,  89. 
Accounts, 

Analysis  of,  48. 

Classification  of,  48. 

Closing  of,  2. 

Definition  of,  4. 
Articles  of  copartnership,  123. 
Assets  defined,  50. 
Auxiliary  books,  37. 

Balance  sheet, 

Definition  of,  53. 

Exercises  for,  54,  55,  56,  57. 

Explanation  of,  53. 

Model  form,  54. 
Bank  statement,  122. 
Bill  books. 

Explanation  of,  62,  63. 

Forms  of,  62,  63. 
Bills  Payable,  14,  16,  18. 
Bills  Receivable,  14,  18. 
Books  of  record. 

Classified,  37. 

Explained,  37. 
Books  used  in  single  entry,  ICX3. 
Business  letters,  92,  93. 
Business  practice,  107. 

Cash  account,  i. 

Cash  book,  60,  61. 

Cash  book,  single  entry,  103. 

Cash  discount,  58,  70. 

Classification  of 

Accounts,  48. 

Books  of  record,  37. 
Closing  an  account,  2. 
Closing  the  ledger,  50,  51,  52. 

Comparison  of  single  and  double  entry,  100,  105,  106. 
Consignments,  87. 
Correction  of  errors,  42. 
Credit,  6. 


Day  book, 

Explained,  37. 

Form,  38. 

Single  entry,  102. 
Day-book  journal,  65,  66. 
Debit,  6. 
Discount, 

Cash,  58,  70. 

Time,  36. 

Trade,  58,  59. 
Drafts, 

Form  of,  90. 

Uses  of,  90. 

Errors, 

Correction  of,  42. 

Finding  of,  77, 
Exercises  in  opening  and  closing  books  95,  96,  97, 
Expense  account,  23,  25. 

Filing,  107, 

Financial  accounts,  48. 

Finding  errors  in  trial  balances,  77. 

Forwarding  accounts,  3. 

Gain,  5. 
Goodwill,  140. 

Impersonal  accounts,  48. 
Indorsements,  12,  13. 
Interest,  35. 
Inventory,  10,  23. 

Journal,  28. 
Journalizing,  28. 

Ledger  form,  i. 
Liabilities  defined,  50. 
Loss  and  Gain  account,  25. 
Loss  and  Gain  explained,  6. 

Merchandise  defined,  5. 
Merchandise  account,  5,  8. 


5,99. 


141 


142 


INDEX 


Nominal  accounts,  48. 
Note,  form  of,  li. 
Notes,  II,  12. 
Notes  payable,  14. 
Notes  receivable,  14. 

Opening  an  account,  4. 

Opening  and  closing  exercises,  95,  96,  97,  98,  99. 

Order  of  closing  the  ledger,  50,  51,  52. 

Personal  accounts,  21,  48. 
Posting  explained,  43. 
Post  marking,  43,  44. 
Profit  and  Loss  account,  6, 
Price  lists,  68,  69,  124. 
Promissory  notes,  11. 
Proprietor's  account,  24,  26. 
Purchase  book,  126. 


Real  accounts,  48. 
Real  estate  accounts,  73. 
Red  ink,  4. 
Resources  defined,  50. 
Returned  purchases,  71. 
Returned  sales,  71. 
Ruling,  2. 

Sales  book,  64. 
Shipments,  87. 
Signs,  viii. 
Single  entry. 

Books  used,  lOO,  loi. 

Day  book,  102. 

Forms,  I02,  103. 

Sundry  accounts,  23, 

Trade  discount,  58. 
Trading  accounts,  48. 
Trial  balance,  44,  45. 


YD  24513 


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